The consequences of the trade war include global GDP growth below potential, noted French credit insurer Coface. 

The current U.S. administration is implementing a wide range of monetary, regulatory and trade policies, including the imposition of significant tariffs on certain imports into the United States. 

Foreign governments, including the Chinese government, have announced their intention to implement or increase tariffs on imports from the United States in response.

Consequences of the trade war

For Coface, the fears it expressed in early 2025 were not unfounded. In retrospect, they even appear to have been underestimated, with implications of actual events exceeding precedent and expectations. 

On the one hand, the new US administration has embarked on a full-scale trade war. On the other, geopolitical tensions have taken a dramatic new turn with the Israeli and US bombings of Iran and Iranian retaliation. 

In both cases, Coface considers the macroeconomic consequences to be likely to be significant, although it is still too early to estimate their exact magnitude. 

As of August 1, significant tariff changes are expected in the United States, with increases for Mexico, Canada and other countries. The United States negotiated agreements with Japan, Vietnam, Indonesia and the Philippines, among others. The exact details of these agreements are still unknown. 

At the same time, uncertainties persist regarding the USMCA, Section 232 and future U.S. unilateral measures on virtually every country in the world.

Expectations were upended by the extreme scope and extent of the announced tariffs, as well as the speed with which they are postponed or reversed. 

Oil supply

With other policies in President Donald Trump’s platform (tax cuts, deregulation) postponed until late in his term, the first few months have been dominated by a proliferation of uncertainties, as well as endless speculation about the outcome from the White House. 

“At this point, the outcome of this trade war is still unknown, but it is likely to keep global growth below potential,” Coface said. 

With regard to the conflict with Iran, its impact on the economy depends on the consequences for global oil supply from the Middle East. 

With respect to the conflict with Iran, its impact on the economy depends on the consequences for the world’s oil supply from the Middle East. 

In this respect, the fact that all players, including Iran, have an interest in maintaining the flow of oil is not a sufficient guarantee. The ability of the United States to protect the oil monarchies will be a decisive factor in the coming months.