Since Donald Trump was elected, there has been a growing risk of US trade policy increasingly relying on protectionist measures. The aim of this isolationist policy is to secure jobs and income at home. In reality, however, higher import duties and other import obstacles would mean that weakening of international trade triggered by the US would incur a loss of income worldwide, especially in the US.
In the worst-case scenario for the United States, annual US economic output would drop by 2.3 percent in the long term. In today's terms, this would result in a loss of gross domestic product (GDP) to the tune of USD 415 billion. This is the key finding of a recent study by the ifo Institute on our behalf.