United States president Donald Trump’s trade policies are likely to escalate further, Scope Ratings cautioned in a report published on Tuesday 12 August 2025. The agency identified five key factors driving the prospect of intensifying trade conflicts, which it said were already set to slow global output by an estimated 0.7 percentage points in the medium term.
Market conditions encouraged risk taking
Markets, Scope observed, had grown increasingly complacent towards US trade escalations. US equities remained at or near record highs, and financial market volatility had reached multi-year lows. The report noted that recent proposals by Trump for blanket duties of 15% to 20% were increasingly treated by markets as the “new normal” rather than a penalty. This loosening of market constraints, the agency warned, raised the risk of further trade conflicts.
US economy showed resilience
The report highlighted the US economy’s resilience as a key enabler of trade policy aggression. Second-quarter GDP rebounded by 0.7% quarter-on-quarter, while the GDPNow model suggested positive growth in Q3.
Scope Ratings reduced its 2025 US growth forecast to 1.8% but raised its 2026 projection to 2.1%, still above most advanced economies. It added that tariffs, though higher than in recent decades, remained insufficient to impose effective embargoes or inflict severe economic losses. Inflationary effects of trade barriers, Scope observed, had also taken longer than expected to materialise.
Customs revenues bolstered the US budget
US Treasury data, cited in the report, showed that customs duties reached a record $66bn in the second quarter of 2025, with a further $28bn collected in July 2025.
By comparison, monthly averages had been below $7bn in 2024. Scope Ratings noted that this surge in revenues helped trim the US general government deficit, which it estimated at 5.4% of GDP for 2025.
Limited responses from trading partners
Scope reported that most trading partners had limited their responses to bilateral measures. Only China and Canada had implemented significant counter-tariffs, while others, including the UK and the EU, sought to protect multilateral rules and global supply chains. Trading partners pledged more than $1trn in investment to the US and facilitated market access while slashing duties on US goods.
Scope noted that the preference of Washington and Trump for bilateral negotiations had constrained broader reprisals and encouraged competition within regional clusters, creating a two-tier global trading system that could strengthen US trade terms and help reduce the annual trade deficit.
Domestic politics favoured escalation
Domestic political conditions were also conducive to escalation, Scope concluded. Republican concerns over potential losses in the 2026 mid-term elections had eased as Trump’s approval rating remained around 90% among his party’s voters. The passage of the so-called “Big Beautiful Bill” had further bolstered the president’s political capital.
Average duties at multi-decade highs
Average US customs duties had risen sharply to 18.6%, up from 2.5% at the end of 2024 and 1.5% in 2016, the report noted. Duties on advanced-economy trading partners averaged 15%, while emerging economies faced 21.4%.
Scope projected that these tariffs would reduce global output by 0.7pps, with US output declining slightly more, by 0.9pps, as re-shoring mitigated cumulative costs. The EU economy was expected to see a smaller impact, at 0.4pps, and Scope revised its 2025 global growth forecast down by 0.4pps to 3.0%.
