A macro model examines the dynamics of important economic indicators like GDP growth, inflation and unemployment. You also need to understand how to extract insights from this analytical tool for effective scenario planning.
You can use our macro model to anticipate the consequences of potential macroeconomic events, which helps you prepare for shifts or pivot resource allocation. Let’s review the impact of two scenarios that are top of mind for business leaders, Trump Total Agenda and Trump Tariff Easing.
Scenario analysis: Trump policy risks
Changing US import tariffs under the Trump administration are a major source of uncertainty with far-reaching implications for companies across industries worldwide. Assessing both the upside potential and downside risks is critical to safeguard business resilience.
Let’s start with the baseline forecast, which represents the most likely outlook. You can use our macro model to evaluate key economic indicators like real GDP growth or inflation and how business conditions are anticipated to evolve.
Our baseline forecast accounts for the 10% blanket tariffs the US imposed on imports from all countries, and higher tariffs on several countries, such as Canada, Mexico and China. Global real GDP growth is set at 2.9% in both 2025 and 2026. Inflation is expected to stay at 4.1% in 2025 and 3.4% in 2026.
However, this baseline reflects only one possible outcome. A pessimistic Trump Total Agenda scenario envisions the complete implementation of tariffs announced on 2 April 2025, alongside lower taxes and tighter immigration controls within the country. The probability over a one-year period is 25%.
Under Trump’s full agenda, global real GDP growth would slow to 2.3% in 2025 and 1.2% in 2026. The impact would be even more severe for the US. Growth could fall from the baseline forecast of 1.8% to 0.5% in 2025 and from 1.7% to -0.9% in 2026. 
In contrast, the optimistic Trump Tariff Easing scenario sees a full rollback of tariffs introduced in 2025 with a 15% probability. The removal of trade barriers would accelerate global real GDP growth to 3.1% in 2025 and 3.3% in 2026. US real GDP growth would rise to 2.3% in 2025 and 2.2% in 2026.
From scenario analysis to contingency planning
Companies are ramping up risk mitigation efforts to shield operations and supply chains from disruption as a result of escalated US tariffs. Many are reevaluating production locations and looking to reduce their reliance on high-risk markets like China and Mexico.
Manufacturers, including Honda, LG, Samsung and Newell, announced plans to relocate parts of their production to the US. Moves include factory expansions and the addition of extra shifts at existing US plants, aimed at reducing exposure to cross-border duties.
European automakers, such as Audi and Land Rover, temporarily paused shipments while others accelerated deliveries ahead of expected new tariffs. Apple ramped up smartphone exports from India in March, and Irish pharmaceutical exports to the US surged as firms moved quickly to get ahead of potential cost hikes.
Chinese online retailers Temu and SHEIN, which benefit from the de minimis import rule, are also adjusting their strategies by investing in new storage and distribution facilities within the US and in countries with more favourable tariff regimes. Retailers are seeking alternative markets to potentially redirect a part of their exports as they anticipate weaker demand from the US amid a potential economic slowdown.
Companies selling in the US market are weighing price increases given rising trade tensions. Walmart, for instance, announced price increases across a range of products, including toys, groceries and electronics because of anticipated import tariff spikes.
A macro model can help you better understand economic risks in target markets. You’re able to test different scenarios and see which economies could be hit hardest to prepare an effective response strategy.
Systematic incorporation of regularly updated macroeconomic forecasts and alternative scenarios leads to more robust business planning. Try our free macro model dashboard to analyse these two Trump policy scenarios against baseline projections for key indicators across major economies.
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Editor’s notes: This article was originally published in January 2019 and has been updated. Forecasts are updated on a regular basis; this scenario analysis reflects the most updated data and information available as of the publication date.
