CROSS-SECTORAL ECONOMIC IMPACTS OF THE 2025 U.S. TARIFF PACKAGE AND RETALIATORY MEASURES

Abstract

This paper systematically assesses the cross-sectoral effects of the 2025 U.S. tariff policy package and related retaliatory measures. A multidimensional framework integrates trade substitution, supply-chain optimization, semiconductor tiering policies, dynamic tariff revenue, and a simplified CGE module. Under the stated parameters and scenario assumptions, simulations suggest that China’s increase in the retaliatory tariff on U.S. soybeans from 7.5% to 25% reduces modeled U.S. soybean exports to China by 23.5%, while a 25% U.S. import tariff on Japanese automobiles reallocates production toward U.S. and Mexican channels. The semiconductor module evaluates U.S. tariff-subsidy combinations by technology tier, and Monte Carlo simulations quantify the trade-off between U.S. tariff revenue and import contraction. The scenario results indicate that targeted subsidies are more effective than tariffs for overcoming high-end semiconductor technology barriers, whereas broad high tariffs provide only limited manufacturing-reshoring gains and increase inflation and welfare risks. The findings provide a conditional quantitative basis for comparing tariff, subsidy, and supply-chain strategies.