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Trade Policy Shocks under the Second Trump Administration

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  • Houssein Guimbard

Abstract

This paper asks how a legally durable tariff regime could reproduce the "ideal" structure that the second Trump administration had assembled by November 2025 high, country-differentiated tariffs combining Section 232 protection, IEEPA reciprocal tariffs and framework deals — after the Supreme Court struck down the IEEPA tariffs in February 2026. From a product-level database of every U.S. tariff action of 2025–2026, I distinguish each statutory instrument and assess five configurations through counterfactual general-equilibrium analysis, measuring how far each realistic, durable regime stands from that November 2025 target and through which instrument the administration could return to it. Every configuration lowers U.S. GDP (by 0.37 to 1.37%) while improving the terms of trade; but on the metric tied to the stated objective — the reindustrialisation of manufacturing — a prospective, legally durable Section 301 regime can produce similar results to those of the target, raising U.S. manufacturing value added by +3.6% against +4.4% for the November 2025 hybrid and +1.9% for Section 232 alone. Instrument design — coverage breadth and partner targeting — matters as much as the average tariff level for the cross-country incidence, targeted Section 301 tariffs creating winners among non-targeted economies while broad-based configurations produce near-universal losses.

Suggested Citation

  • Houssein Guimbard, 2026. "Trade Policy Shocks under the Second Trump Administration," Working Papers 2026-07, CEPII research center.
    • Handle: RePEc:cii:cepidt:2026-07
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    References listed on IDEAS

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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