What would be the impact of US protectionism on world trade? Bloomberg runs its model.
Of all the goods traded globally, 20% either go to the US or come from the US. In our model with tariffs, we’re looking at that falling to 9%. Other countries will have to replace the market that they have lost in the US and replace some of the goods that they’re not importing from the US anymore. But most countries can replace a lot of that loss by exporting to and importing from the rest of the world. We project trade of goods between all other countries to increase by 5%. So total world trade goes down by just 7.5%.
So the global economy’s reliance on trade might be a little bit lower than before, but the final result would be that the world is drawn closer together. The US is a major partner for many countries, but compared with the rest of the world taken together it’s still actually quite small. (There are two exceptions, and you could guess them: Mexico and Canada.)
Source: Bloomberg