Assessing the macroeconomic impacts of the 2025 US tariffs by Hongyan Zhao published by BIS (11/2025).
This paper develops a multi-country, multi-sector trade model with input-output linkages to analyze the global macroeconomic effects of the United States’(US) 2025 tariff policies. The model incorporates endogenous labor supply and captures the transmission of tariff-induced shocks through global value chains (GVCs). By simulating both short-run and long-run adjustments, the analysis demonstrates how trade shocks are amplified by sectoral interdependence and labor market dynamics. The results reveal substantial short-run output losses and inflationary pressures, especially for economies deeply integrated into US supply chains, while long-run reallocations partially mitigate—but do not fully offset—these impacts.