This research was published on April 10, 2025

On April 2, President Trump followed through on campaign promises to steeply hike tariffs on U.S. trading partners, taking the average effective tariff rate to around 23%, a near 10-fold increase of the rate last year. As sharp and severe selloffs in financial markets underline the global scope and radical uncertainty of this move, executives are racing to build an understanding of the global economic impact.

This is a complex and fluid policy shock, which prevents any quick or precise conclusions, as underlined by the April 9 announcement that “reciprocal” tariffs would be paused for 90 days for most countries. There will be primary effects that are difficult to estimate, as well as knock-on effects that may come to matter even more. Moreover, the draconian tariffs may be the opening gambit for fragmented negotiations, underlining the new regime of “deliberate uncertainty” that executives have to navigate now.