The Estimated Economic Impact of Tariffs

Global Macroeconomic Impact

1. Global GDP slowdown: The OECD has downgraded global growth forecasts to around 2.9% for 2025 and 2026, citing U.S. tariffs and heightened uncertainty (Business Insider, Wall Street Journal). Similarly, BBVA projects that if current tariffs hold steady, global growth could initially slow by 0.2 to 0.5 percentage points (BBVA Research).
2. Stagflation risks: Citi Research labels U.S. tariffs as a stagflation shock—dampening both spending and real GDP while raising inflation. Global growth, in their model, could drop by approximately 1 percentage point over the year (Citi).
3. World Economic Forum simulation: A generalized 10-point tariff hike could reduce global GDP by 0.7% in the first year, potentially escalating to a 2–3% drop over two years if uncertainty and financial stress intensify (World Economic Forum).

Impact on Countries with Vulnerable Economies

1. Mexico & Canada: EY estimates that a scenario involving 25% tariffs on Canada and Mexico (and 10% on China) could shrink Mexico’s GDP by 1.6% in 2025 and up to 4.5% in 2026. Canada could suffer 2.7% in 2025 and 4.3% in 2026 drops, accompanied by inflation surges of nearly 2 percentage points (EY).
2. India: Moody’s forecasts a 0.3 percentage point reduction in India’s GDP growth for fiscal year 2025–26 due to a newly imposed 50% U.S. tariff, though strong domestic demand may partially offset the blow (The Economic Times).
3. Other emerging economies: Inzenius’s modeling suggests typical GDP losses in the range of 0.2–0.6%, though export-dependent economies like Vietnam could face far steeper impacts—potentially exceeding 6% GDP contraction (inzenius.com).

Some Global Financial Estimates by Region / Country and Projected GDP Impact

• Global Economy: –0.2 to –1% (short term); –2 to –3% (medium term in stressed scenarios)
• Mexico: –1.6% (2025); –4.5% (2026)
• Canada: –2.7% (2025); –4.3% (2026)
• India: –0.3 percentage points in FY2025–26
• Vietnam & similar: –0.2 to –0.6% typical; up to –6% in extreme cases

It is estimated that the impact of tariffs on the American domestic economy—particularly in Southern states like Arkansas, Mississippi, and Texas can vary depending on the specific industries affected, size of companies involved with regard to the nature of the tariffs, and the overall global economic climate. Generally, economists have observed snapshot of Southern states in America with the following trends:

Agricultural Sector

1. Hardships are estimated to impact Southern regional states in the agricultural sector such as retaliatory tariffs may likely affect farmers hardest.
2. Export-driven crops affected: Southern states export large amounts of soybeans, cotton, rice, and poultry. When the U.S. imposes tariffs on countries like China or the EU, those countries often retaliate with tariffs on American agricultural products.
3. Arkansas: A top rice and poultry producer; heavily affected by Chinese and European retaliatory tariffs.
4. Mississippi: Exports soybeans, corn, poultry; saw price drops during trade wars.
5. Texas: Major cotton exporter; affected by decreased demand from tariff-targeting countries.
6. Price Volatility: Farmers face uncertainty, depressed commodity prices, and shrinking foreign markets, sometimes requiring federal bailouts or subsidies (e.g., USDA Market Facilitation Program).

Manufacturing & Supply Chain Disruptions

1. Tariffs on steel, aluminum, or imported components affect Southern states with manufacturing hubs.
2. Auto and machinery industries (particularly in Texas) rely on imported parts. Tariffs increase input costs and reduce competitiveness.
3. Oil & Gas equipment: Texas, a hub for energy manufacturing, saw increased costs on imported drilling equipment due to tariffs on steel and aluminum.

Consumer Price Increases

1. Tariffs often act as a tax on imported goods, which can lead to:
2. Higher prices on goods like electronics, appliances, and vehicles, impacting consumers across income levels.
3. Greater burden on low-income households common in parts of the rural South, where consumer spending is a larger share of income.

Mixed Effects in Texas

1. Texas is more economically diverse than Arkansas or Mississippi:
2. Energy exports (e.g., crude oil and LNG) sometimes benefit from trade disputes if foreign markets shift demand.
3. Ports (e.g., Houston, Corpus Christi): Sensitive to shifts in global trade patterns; tariffs can decrease cargo traffic and affect jobs.
4. Technology: Tariffs on China impacted tech imports and exports related to Texas-based companies.

Employment Impacts

1. Job losses in agriculture and manufacturing can result from reduced demand or increased production costs.
2. However, short-term job gains may occur in protected industries (e.g., U.S. steel), though these are usually smaller and less sustainable.

Some U.S. Southern States estimated impact by industry

1. Arkansas: Industry - Agriculture (rice, soybeans, poultry); Impact - (Negative) e.g. Export losses, lower prices
2. Mississippi: Industry - Agriculture, manufacturing; Impact - (Negative) Supply chain and price pressures
3. Texas: Industry - Energy, tech, manufacturing, agriculture; Impact - (Mixed) Some gains in energy, losses in trade-heavy sectors

Questions we should ask ourselves about global economic impacts:

• Are the U.S. tariffs dragging down global growth, with many forecasts and models pointing to modest to substantial slowdowns?
• Do Weaker economies, especially those highly reliant on exporting to the U.S., are bearing a disproportionate burden—some facing multi-percent contractions in GDP?
• Is the broader fallout of global tariffs extending beyond direct trade disruption: inflation, consumer squeeze, investment uncertainty, and stagflation dynamics are emerging threats across economies?

Questions we should ask ourselves about domestic economic impacts:

• Are the U.S. tariffs dragging down global growth, with many forecasts and models pointing to modest to substantial slowdowns?
• Do Weaker economies, especially those highly reliant on exporting to the U.S., are bearing a disproportionate burden—some facing multi-percent contractions in GDP?
• Is the broader fallout of global tariffs extending beyond direct trade disruption: inflation, consumer squeeze, investment uncertainty, and stagflation dynamics are emerging threats across economies?