【麥肯錫】2025關(guān)稅紛爭(zhēng)下的全球經(jīng)濟(jì)信任與平衡共筑繁榮研究報(bào)告

May2025

Mcsey

&company

GeopoliticsPractice,McKinseyGlobalInstitute,andStrategy&CorporateFinancePractice

Inamomentoftariffs,

cantheworldfindbalanceandtrusttothrive?

Amidtariffuncertaintyandapossiblerecession,theworldneedsanewbaseofbalanceandtrusttocreateathrivingeconomy.Businesshasavitalroletoplay.

ThisarticleisacollaborativeeffortbySvenSmit,ShubhamSinghal,OliviaWhite,EzraGreenberg,

JanMischke,MattWatters,CindyLevy,andRebeccaJ.Anderson,representingviewsfromMcKinsey’sGeopoliticsandStrategy&CorporateFinancePracticesandtheMcKinseyGlobalInstitute.

Aglobalsystemoffulleconomicintegration—theaspirationofdecadesofnegotiationsandtheworldwideunderpinningofcorporatestrategy—hasneverbeenfullyrealized.Thelatest

roundofglobaltradetalkssputteredtoaninconclusiveendintheearly2010s.Butevenas

viewsonthebenefitsandfairnessofthesystemdivergedamongcountries,therewasnoovertchallengetotheframeworkofglobaltrade.ThatchangedonApril2,2025,whenUStariff

announcementsrevealedinstarkfashionsomeoftheunderlyingdiscontentwiththisconstruct.

Intheweekssincetheannouncements,sharepricesandtheUSTreasurymarkethavegyrated.

ExpectationsofUSinflationhavespiked.Consumerconfidencehasplummetedbacktolows

lastseenin2022,asinflationsurgedaftertheCOVID-19pandemic.Inthefirstquarter,theUS

economyshrankby0.3percent,ascompaniespulledforwardimportsandinventoriesgrew.

Manyanalystshaveraisedtheirestimatesoftheprobabilityofaglobalrecession.Aftertwoyearsofnearly3percentrealGDPgrowth,isthemomentumintheUSeconomystrongenoughtoworkthroughtheseheadwinds?

Inourview,thehistorythatledtothisvolatilemomentisimportantbutnotasimportantas

whatcomesnext.Manywillagreethatglobalandlocaleconomiesneedtofindanewbalance:

aUnitedStatesthatproducesmoreofwhatitconsumes,aChinathatconsumesmoreofwhatitproduces,aEuropethatiscompetitiveandcangrow,anda“globalsouth”thatconnects

withadvancedeconomiesandfindsitspathtoprosperity.Toachievetheseoutcomes,leadersofbusiness,government,andsocietycanextendtheirattentionbeyondtoday’stradeand

budgetdeficitdebatestoaskwhattheycandotogettheglobaleconomyonthepathtoachievethisgoal.

Inthatsense,thequestionnowisn’twhetherthecurrentpathofescalatingtariffsandtrade

tensionsistherightone.Morecritically,thequestioniswhetherthepaththatleaderschoose

nextwillfurthererodetrustamongcountriesandwithinsocieties,orwillthepathbegintorebuildthattrust?Willleaderschoosetocontinuedownaseeminglyunsustainablepath?Orwillthey

choosetobalanceeconomicresilienceandnationalsecurityneeds?Economiesneedstable

andsecureinvestmentenvironmentstogrowandprosper.Theyalsoneedreliablepartners.

Economieswithoutbalanceandtrustcan’tthrive(Exhibit1).Theextentofbalanceandtrustcandeterminethedistributionofincomeacrosspopulations.Severalkeyindicatorscanshowhowbalanceandtrustaffecteconomicoutcomes.

Economieswithoutbalanceandtrustcan’tthrive.

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?2

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?3

Exhibit1

Cantheglobaleconomicsystemgainthetrustandbalancetothrive?Outcomesforeconomicsystems

Population,%

Income2035,$

Trust&thrive

Illustrativeincomedistributions

Nearlyall

households

havehigh

income(peakofcurveat

farright)

Majorityof

householdswithlowincome,

butrelatively

largenumber

withhighincome

(fattailatright)

Nearlyall

households

havelow

income(peakofcurveat

farleft)

Majorityof

householdswith

highincome,butrelativelylarge

numberwithlowincome(fattailatleft)

Freelowsofdata,people, capital,andtrade

Transparentlegaland

enforcementframeworks

Lowerriskpremiumsand transactionandmonitoringcosts

Con?dence inlong-termcommitments

Trust&thrive

Freelowsofdata,people, capital,andtrade

Transparentlegaland

enforcementframeworks

Lowerriskpremiumsand transactionandmonitoringcosts

Con?dence inlong-termcommitments

Domestic

productionandtrade

Householdsaving,Allocationofwages,

debtmanagement,distributedpro?ts,

andhumancapitalandretainedearnings

Fiscal

sustainability

Economic

resilienceand

nationalsecurity

Balance

&thrive

IllustrativekeyindicatorsGDPpercapita

Income/wealthinequality

Productivitygrowth

Inlationandinterestrates

Policyuncertainty,VIX

Trade/?scalbalance

GDPpercapita

Income/wealthinequality

Productivitygrowth

Inlationandinterestrates

Policyuncertainty,VIX

Trade/?scalbalance

LowHigh

LowHigh

GDPpercapita

Income/wealthinequality

Productivitygrowth

Inlationandinterestrates

Policyuncertainty,VIX

Trade/?scalbalance

GDPpercapita

Income/wealthinequality

Productivitygrowth

Inlationandinterestrates

Policyuncertainty,VIX

Trade/?scalbalance

LowHigh

LowHigh

Domesticproductionandtrade

Householdsaving,Allocationofwages,

debtmanagement,distributedpro?ts,

andhumancapitalandretainedearnings

Fiscal

sustainability

Economic

resilienceand

nationalsecurity

Balance&thrive

McKinsey&Company

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?4

That’sourfocus.Weconsiderquestionssuchas:Whatarethebalance-andtrust-based

dynamicsofathrivingglobaleconomy,whatistherelevantcontext,andwhatarethefiveglobalscenariosforfuturegrowththatwebelievecanhelppeoplenavigatethepathforward?WeoffersomesignpoststhatCEOsandotherscanusetoseewhichscenariomightbeunfolding.

Balanceandtrusttothrive

Therearemanywaystodescribeathrivingmarketeconomy,butatitsbest,it’sasystemthatseeksabalancebetweenfreedomandfairness,deficitsandsurpluses,andthedistributionofproductionandconsumption.Itextendsopportunitytoall,fostersinnovation,protectschoice,andrewardseffort.Byprioritizingtrust,instillingconfidence,andencouraginglong-term

investment,itdrivessustainedproductivitygrowthandrisinglivingstandardswhileavoidingnegativeexternalities.

Howdoesbalanceaffecttheabilityofaneconomytothrive?Externalbalancereflectshealthy

domesticproductionandtrade.Internalbalancesignalssustainablefiscalpolicies.Household

balanceindicatessoundsaving,debtmanagement,andhumancapitalinvestment.Corporate

balancereflectslong-termorientationtotheeffectiveallocationofwages,distributedprofits,

andretainedearningsneededforinvestment.Balancealsoentailsresilienceandsecurity.

Resiliencerequiresdomesticproductionorreliableaccesstoessentialgoods,suchas

pharmaceuticals.Securityreliesonthecapacitytoprocureorproducethecriticalgoodsand

servicesneededtodeterexternalthreatsandsupportallies.Lackofbalancerisksfinancial

instabilityanddegradesthecapacitytoinvestinthehumanandphysicalcapitalrequiredtodriveinnovation,productivity,andgrowth.

Howdoestrustaffecttheabilityofaneconomytothrive?Inhigher-trustenvironments,theriskpremiumrequiredtodobusinessfalls.Informationflowsmorefreely.Transactionandmonitoringcostsdeclinewithtransparentlegalandenforcementframeworks.Trustcanunleashtheenergy,entrepreneurship,andinnovationthatfuelathrivingeconomy(Exhibit2).Incontrast,thrivinginlower-trustenvironmentsoftenrequiresmoredeliberate,explicit,andpotentiallycoerciveuse

ofenforcementmechanisms.Thisaddsfrictionandtransactioncosts,promotesless-scalableformsofbusiness(forexample,familial-orcommunity-basedorganizationofbusiness),and

reducespotential.

Trustcanunleashthe

energy,entrepreneurship,andinnovationthatfuelathrivingeconomy.

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?5

Exhibit2

Whentrustincreases,economicoptimismoverpowersgrievance.

100

Shareoffamilieswithhighsenseofgrievance

andeconomic

80

optimism,

segmentedby

leveloftrust,1

60

%selectingtop2choicesona

5-pointscale

40

20

0

123456789

EconomicoptimismAnindividual’ssenseofeconomicprospects2

●Grievance

Anindividual’ssense

ofwhetherbusiness,

government,andthe

wealthyservethe

interestsofonlya

certaingroupofpeopleortreateveryone

equallyandfairly

Trust

Anindividual’s

averageleveloftrustofgovernment,media,business,and

nongovernmentalorganizations

DISTRUSTTRUST

Trustlevel

1OnlinesurveyOct25–Nov16,2024,across28countries,~33,000respondents;thisquestionexcludesChinaandThailand.

2Responseto:“Thinkingabouttheeconomicprospectsforyourselfandyourfamily,howdoyouthinkyouandyourfamilywillbedoingin5years’time?”Source:2025EdelmanTrustBarometerglobalreport:Trustandthecrisisofgrievance,DanielJ.EdelmanHoldings,Jan23,2025

McKinsey&Company

Whatmightabalanced,higher-trustglobaleconomyevolveintoin2025andbeyond?Thrivingmightlooklikethis:

—aUnitedStatesthatproducesmoreofwhatitconsumes,reinsindeficits,restoreslong-

termfiscalstability,revitalizesstrategicindustries,anddrivesgrowthinawaythatliftsthemiddleclass

—aChinathatconsumesmoreofwhatitproducesandsuccessfullycompletesitslong-soughttransitionfromaneconomydrivenbyexportsandfixedinvestmenttoonepoweredbyrisingdemandfromdomestichouseholds

—aEuropethatreignitescompetitivenessthroughboldinvestment,acceleratedR&D,and

capitalmarketandregulatoryreformsthatunlocktheproductivityrequiredtosustaingrowthacrossthecontinentandbolstertrade

—aglobalsouththatdeepensintegrationwithadvancedeconomiesthroughstrengthenedinstitutionsandexpandingflowsofcapital,ideas,andpeople

Individually,thesestepsmatter.Buttogether,theywouldbetransformative.Theywouldofferthepossibilityofrenewingglobaltrust,restoringbalance,andbuildingthefoundationsofamore

prosperousworld.Fewwilldisagreewiththegoal.Whatwillbecontentiousarethechoicesthatleadersmusttakeandthecompromisesinvolvedtosettheworldonthisjourney.

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?6

Howdidtheworldgethere?

Trustacrosstheglobaleconomyhasbeenfalteringforsometime,andpressureshavebeen

building.Infact,trusthasneverquitereachedthelevelsrequiredforatrulythrivingglobal

economy.AftertheColdWar,therewerehopesforadeepertrust-basedsystem.Therecipeofthelate1990sand2000sdidsetthestageforbreakoutgrowthinChinaandothercountries.

Itadvancedglobaleconomicintegration,liftedbillionsoutofpoverty,andimprovedtheliving

standardsofhundredsofmillionsofWesternconsumers.Italsocamewithmanyconsequencesthatwereignored,minimized,orsimplymissedalongtheway.

Forone,muchoftheworld’scapacityincriticalindustriesbecameconcentratedinasingle

country:China.This“Chinashock”happenedsoquicklythatmanycommunitiescouldn’tadapt.Thecriticaltransitionfromlocalindustrytoglobalintegrationwas—andstillis—painful.The

growthoflow-andhigh-payingjobsinEuropeandtheUnitedStatesacceleratedwhilethemiddledroppedout(Exhibit3).Incomeinequalityrose,electoratespolarized,andsocietaltrustdeteriorated.

Exhibit3

Throughoutthe2000s,middle-wageworklostshareofemploymentandsawwagesgrowmoreslowly.

Changeinemploymentsharein2000–18,bywagebracket,percentagepoints

4

3

Europe1US

Highwage

>70th

percentile

Europe1US

–6

–7

Middlewage

30th–70th

percentile

2

3

Europe1US

Lowwage

<30th

percentile

USrealmedianwagein2000–18,bywagebracket,%change

7.3

5.3

1.1

Highwage

>70th

percentile

Lowwage

<30th

percentile

Middlewage30th–70thpercentile

Note:FiguresforEuropebasedonskilllevel,while?guresforUSbasedonwages.Wagethresholdsfor2018basedonannualizedmedianwagesof<$30,000forlow,$30,000–60,000formiddle,and>$60,000forhigh.Werecognizeskilllevelandwagelevelarenotalwayscorrelated;wemakethiscomparisonduetodataavailability.

1IncludesAustria,Belgium,Denmark,Finland,France,Germany,Greece,Ireland,Italy,Netherlands,Norway,Portugal,Spain,Sweden,Switzerland,andUK.

Source:CEDEFOP;USBureauofLaborStatistics;McKinseyGlobalInstituteanalysis

McKinsey&Company

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?7

Thestabilityoftheeconomyinthedecadefollowingthe2008globalfinancialcrisisalsoleft

muchtobedesired.Onthe

globalbalancesheet

—theaccountingoftheworld’sassetsand

liabilities—every$1.00ininvestmentwasoutmatchedby$1.90innewdebt.Chinacontinuedtoaccelerateitsmanufacturingdominance,Europesloggedthroughalostdecade,andtheamountofUSnationalincomecapturedbybusinessprofitscontinuedtoincrease,whileemploymentandwagesfailedtokeeppace(Exhibit4).

Exhibit4

USrealwagesandemploymenthavegrownslowly,particularlysince2000.

USproductivity,employment,

andrealwagesovertime,index(1950=100)

Productivity1Employment

Realhourlywages

USproductivity,

employment,

andrealwages

overtimeCAGR,%

500

450

400

350

300

250

200

150

100

50

19801990

195019601970

200020102020

1950–74

1975–99

2000–24

1.8

1.9

2.4

1.1

0.9

2.3

2.0

0.7

1.6

1De?nedasrealvalue-addedoutputperhour.

Source:USBureauofLaborStatistics

McKinsey&Company

Startingaround2017,the

geometryoftrade

alsostartedshifting.Geopoliticaldistance(the

degreeofgeopoliticalalignment)amongtradepartnersstartedtocompressformanycountries,signalingdeteriorationofcross-bordertrust.ThencametheshocksoftheCOVID-19pandemicandRussia’sinvasionofUkrainethatamplifiedmanyongoingtrends(suchasdigitization)and

revealedthevulnerabilitythathaddevelopedthroughglobalintegration.Allthislefttheglobaleconomywitheconomicandsecuritychallengesthatbusinessesandgovernmentscontinuetograpplewithtoday.

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?8

OnApril2,2025,theUnitedStatesannouncedtariffsthatwouldbethehighestin100years.

Economic-policyuncertaintyandinflationexpectationsapproachedorexceededtheirhighestpointsinthepast25years,andconsumerconfidenceapproacheditslowestpoint(Exhibit5).

Exhibit5

UStarifannouncementsonApril2,2025,coincidedwithplummeting

consumercon?dence,highinlationexpectations,andpolicyuncertainty.

USefectiveappliedtarif,1%USeconomicpolicyuncertaintyindex3

60

50

40

30

20

10

0

~22%Averagetarif

resultingfromApril2,2025,announcement2

600

500

400

300

200

100

0

522fromApril11,2025

180019002000

USconsumercon?dence,?index(1966=100)

120

100

80

60

50.8April2025

200020102020

2000201020202024

USexpectedinlationovernextyear,?%

7

6.7%April2025

6

5

4

3

2

1

0

200020102020

1De?nedascustomsrevenueasashareoftotalimports.AsperDouglasA.Irwinpaper,thismayoverstatedutiescollectedandaveragetarifrateincertain

circumstances,asitdoesn’texcludedutydrawbackprovisions.Italsomayunderrepresenttraderestrictiveness,asactualimportsmaytendtowarditemswithlowertarifrates.However,thismeasureallowsforaconsistenthistoricaltimeseries.

2IndicativevaluebasedonannouncedtarifsonApril2,2025,and2024import?gures;doesn’tconsidersubsequentUSpolicyadjustment(eg,subsequentincreasesandpauses).

32-weekmovingaverage,throughApril11,2025.

?ThroughApril2025.

Source:DouglasA.Irwin,NewestimatesoftheaveragetarifoftheUnitedStates,1790-1820,NationalBureauofEconomicResearchworkingpaper,number9,616,April2003;EconomicPolicyUncertaintyIndex;UniversityofMichigan;USCensusBureau;USInternationalTradeCommission;McKinseyanalysis

McKinsey&Company

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?9

Scenariosforatransitiontoanewera

Businessleaderscan’t,ofcourse,changethemacroeconomicenvironment.Whattheycandoisseektounderstandtherangeofplausibleoutcomesofthenewdynamicsintheglobaleconomyandidentifydecisionstotakeinadvanceorcontingentonhowuncertaintyresolves.

Tohelpfocusonthesedecisions,wehavedevelopedfivemacroeconomicscenariosthatseektoboundtoday’shighlyuncertainenvironment.Tworoutesleadtohighertrust,betterbalance,andathrivingeconomy,albeitalongverydifferentcourses.Twomovesideways—notforward—deliveringflatoutcomesandtrustthatfailstorebuild.Oneisdecidedlychallenging—ajourneythatlowerstrust,exacerbatesimbalances,andreducespotential.

ThestartingpointforthesescenariosisthetraderulesasofApril11,2025,keyedtothedramaticshiftsinUSpolicyandreactionsfromChinaandEurope.Theimpactoftrade-weightedtariffs

onUSimportsisunprecedentedbutlessforebodingthanheadlineannouncements,particularlyinthemediumandlongertermsasthescenariosevolve(Exhibit6).Nodoubt,thedynamicswillshiftinunanticipatedwaysinthenextweeksandmonths.Wewillupdatethesescenariosaswelearnmore.

Exhibit6

Fivemacroeconomicscenariosarepartiallyunderpinnedbythreetariftrajectories.

ProjectionsofUStarifs,bymacroeconomicscenario,%1

●1scenario:

globaltensionsescalate

●2scenarios:

norealdisruptionandcentralbankstighten

●2scenarios:

productivityaccelerationandUSfiscalreset

160

120

80

Trade-weightedaveragetarifonglobalUSimports

36

40

13

5

0

2015–25average

Q2202520262027

andbeyond

UStarifonChinaimports

160

145

120

80

40

30

10

0

2015–25average

Q2202520262027

andbeyond

1RelectsaweightedaveragetarifbasedoncompositionofUSimportsbyregionandproductin2023.Source:OxfordEconomics;McKinseyanalysis

McKinsey&Company

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?10

Tworoutestohighertrustandathrivingeconomy

TheproductivityaccelerationandUSfiscal-resetscenarioswouldlikelydeliverthemost

positiveoutcomesfortheglobaleconomy.Atthesametime,theywillbethemostchallengingtoachieve.Inthenearterm,economicheadwindswilllikelymakeadirectjumptotheproductivityaccelerationscenariodifficulttoachieve.Similarly,theUSfiscal-resetscenariowillrequire

deficitreductionofapproximately$1trillionannually—anadjustmentwellbeyondtheproposalsonthetableatthetimeofthiswriting.Nevertheless,theoutcomesenvisionedinbothscenariossetthemedium-andlong-termaspirationsforgrowth:

—Productivityacceleration.Thestepsrequiredforbetterbalanceandincreasedtrustare

initiated.ChinaandtheUnitedStatesdeescalatetensions,reducingtariffsto30percentin

2025andthen10percentin2026,aligningwithmostglobaltrade.(Inthisandallscenarios,

tariffsratesareprojectionsandarenotthestatedintentofgovernment.)China,Europe,andtheUnitedStatestakemeasurestonarrowfiscalgaps;growthhelpsalleviatethedeficits.

TradeimbalancesnarrowastheUnitedStatesrevitalizesstrategicmanufacturingandChina

promotesdomesticconsumption.Debtburdensarerelievedastheproductivity-driven

expansionliftsincomesandrenewsconfidenceintheglobaleconomicsystem.1Growth

surgeslatein2025andgainsmomentum,averagingabout3.5percentgloballybeyond2028.

—USfiscalreset.Similartoproductivityacceleration,thenewUSadministrationprioritizes

restoringfiscalandtradebalancesasessentialtolong-termgrowthandnationalsecurity.

Thedifferenceisthemajorpushtorapidlyreducefederalspending.Inpartnershipwiththe

USCongress,theadministrationenacts$1trillioninannualspendingcutsandtaxreforms,

loweringthedeficitto3percentofGDPby2028.TherapidadjustmenttriggersaUS

recessionin2025andslowsgrowthacrossadvancedeconomies.Inflationandinterestratesfall,butwithitsfiscalhouseinorder,USgrowthreboundsby2026.Withcomplementary,

growth-orientedpoliciesinChinaandtheeurozone,globalgrowthstabilizesnear3percentannuallyafter2028.

Twosidewaysmoves

Theno-real-disruptionandcentral-banks-tightenscenariospictureaglobaleconomythatwillmuddlethroughthesituationwithoutmaterialshiftsineconomic,security,andsocietaloutcomes.Fiscalbalancesandtradepatternswillremainunsettledascountriesposition

foradvantage:

—Norealdisruption.TheglobaleconomymanagesthroughuncertaintyasthepolicyshiftsofApril2025turnouttobelessconsequentialthanfeared.China–UStariffsarenegotiated

downto30percentbylate2025;otherbilateraltariffsstabilizeata10percentfloor(again,

theseareprojections,notastatementofgovernmentintent).Inflationrisesonlymodestlyinthevery-nearterm.DespitetheeffortsoftheDepartmentofGovernmentEfficiency,US

deficitsstayhigh,withonlymodestspendingcuts.Europedeliversnewdefense

commitments,butitseconomicmomentumremainsweak.Inflationreturnstotarget,and

ten-yearyieldsintheeurozoneandUnitedStatesrangebetween3.0and4.0percent.Globalgrowthsettlesataround2.5percentannually.Trustremainsfractured,imbalancespersist,

andtheworlddriftssidewayswithoutmeaningfulcoordinationorrenewal.

1Inthisscenario,tradeimbalancesnarrowasdomesticsavingsgrowrelativetoinvestment.Thisoccursinlargepartasthebudgetdeficit,orgovernmentborrowing,shrinksrelativetoGDP.

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?11

$1trillion

TheannualreductioninUSgovernmentspendingrequiredintheUSfiscal-resetscenario

—Centralbankstighten.Thetarifflevelsassumedinthisscenarioarethesameasinnorealdisruption.Butinthisscenario,thetariffshockreignitesinflation—whichrisestonearly

5percent—forcingcentralbankstoreversecourse.StartinginJune2026,theyhikeratesbyover100basispoints.GrowthcontractsintheeurozoneandUnitedStatesfallmorethan

2percentfrompeaktotrough.China’sgrowthstallstoaround1percentin2027.Globalgrowthremainslowatabout2percentannuallyafter2028,andtrustremainselusive.Internalandexternalimbalancesarenotresolved.Withoutcoordinationorreform,theworlddriftssideways.

Aroutethatchallengestrustandtheabilitytothrive

Thegeopolitical-escalationscenarioentailsadownsideoutcomefortheglobaleconomywiththeforcesofsecularstagnationconstrainingtheabilityofcountriestoachievedesirableeconomic,security,andsocietaloutcomes.Thegeopoliticaldistanceoftradewilldecreaseascountries

looktolimitedblocsoflike-mindedcountriesforsupport.

Globaltensionsescalate.Trusterodeswithinandacrosscountries.ThisscenarioassumesthattheUnitedStateslocksintariffsatApril2,2025,levelsformostcountries,andtariffsonChinaimportsremainat145percentasannouncedonApril9.Chinastickstoa125percentrateonUSgoods.Othermarketsretaliateoneforone.(Asnotedearlier,governmentshavenotstatedtheirfinalintentionsontarifflevels.)Tradebarriersbecomepermanent.Pricesspikeapproximately5percent,butcentralbankslookpastthis.Consumersdon’t,however,anddemandcollapses,triggeringaglobalrecession.Withnonewframeworksforcooperation,fragmentationhardens,geopoliticalfaultlinesdeepen,andglobalinstitutionsfalter.Growthturnsnegativethrough

2026,recoversslowlyin2027,andsettlesatjust1.6percentannuallyafter2028.

Iftariffscauseabuild-upofinflation,centralbankscouldrespondaggressively,andthisscenariocouldplayoutdifferentlyintheshortterm.Assetpricescouldfallmoredramatically,triggering

adeeprecession,largelossesinwealth,andaprolongedperiodofdeleveragingthatultimatelybringsassetvaluesrelativetoGDPbacktowardlong-termhistoricalnorms.Long-termgrowthissimilar.

Exhibit7mapstheeconomiceffectsofallfivescenariosfortheglobaleconomy.Theappendix(page15)showsthesamefor21largeeconomiesworldwide.

Inamomentoftariffs,cantheworldfindbalanceandtrusttothrive?12

Exhibit7

Fivescenarioswouldimplymateriallydiferentchangesininlation,interestrates,andGDPgrowthinmanycountries.

McKinseyintegratedscenarios,selectregions,1asofApr15,2025

US?scalreset

Centralbankstighten

Globaltensionsescalate

Scenarios

Noreal

disruption

Productivityacceleration

Consumerpriceinlation,12-monthchange,%

Centralbankrate,%10-yeargovernmentbond

8

PROJECTION

2029–34CAGR,%

6

2.5

2.7

2.7

2.9

4

2

0

Q12023

2.7

Q42029

yield,%

8

6

4

2

0

PROJECTION

Q1

2023

Q4

2034

8

6

4

2

0

PROJECTION

Q1

2023

Q4

2034

RealGDPgrowth,2%6

AbsoluterealGDPgrowth

potentialbyQ42034,

percentagechangefromQ42024

PROJECTION

4

2029–34CAGR,%

3.9

3.3

2.5

2.2

1.6

47.1

2

38.6

0

28.0

20.7

-2

Q42029

Q1

2023

Q42024

13.9

World

World

Americas

US

Canada

Mexico

Brazil

Argentina

Asia–Paci?c

China

Japan

India

SouthKorea

Australia

Europe

Eurozone

Germany

UK

France

Italy

Spain

MiddleEastandAfrica

SaudiArabia

Israel

UAE

Egypt

Nigeria

1Fivelargesteconomies,byregion.

2QuarterlypercentchangeinrealGDP,annualized.

Source:Nationalstatisticsagencies;McKinseyanalysis,inpartnershipwithOxfordEconomics

McKinsey&Company

Inamoment