Trump's Trade War: Short- and Long-run Macroeconomic Impacts

This article examines the short- and long-run macroeconomic impacts of the trade war initiated by the Trump administration. Using a combination of empirical data analysis and structural macroeconomic modeling, we assess how the trade conflict will likely affect the U.S. output, employment, inflation, and trade balances in the short term, as well as its broader implications for investment, productivity, and global supply chains over the longer horizon. Our findings suggest that while certain industries may experience a temporary relief, the overall economic costs - including higher consumer prices, disrupted global trade flows, and reduced productive investment would likely outweigh the gains. In the long run, persistent uncertainty and shifts in global trade patterns may lead to efficiency losses and a reconfiguration of U.S. economic relationships.