Three scenarios on the course and impact of the “unorthodox,” as it is described, trade policy of U.S. President Donald Trump have been drafted by the German credit rating agency Scope Ratings.

Alvise Lennkh-Yunus, head of sovereign ratings at Scope, states in his analysis that “if implemented, the tariffs would constitute the biggest shock to trade in more than 100 years” and adds that maintaining them “would have significant consequences for the creditworthiness of both the U.S. and countries around the world.”

Even if Trump were to fully withdraw the announced tariffs—something deemed unlikely—”previous alliances and supply chain trust would not be restored, resulting in some degree of permanent economic damage,” he adds.

Given the high level of uncertainty, including the difficulty of predicting the American president’s actions, Scope has prepared three scenarios ahead of its upcoming revision of forecasts on growth and fiscal metrics.

First, the “light tariffs” scenario, where the announced tariffs are the upper limit and starting point for negotiations between the U.S. and other countries. A combination of appeasing the U.S. by other countries and implementing structural reforms to boost domestic demand would lead to a new balance, based on a slightly higher degree of protectionism compared to the past, but ultimately not causing significant damage to trade and capital flows.

In this scenario, the U.S. enters a technical recession—two consecutive quarters of negative GDP—but posts positive growth for the whole of 2025. Global uncertainty remains limited.

Second, the “trade war” scenario. The announced tariffs are largely implemented and become a permanent feature of U.S. trade policy. In response, most major economies—including the European Union and China—impose countermeasures, resulting in a significant drop in global demand, a redirection of supply chains, and heightened uncertainty in 2025, although capital flows remain unrestricted. In this scenario, the U.S. enters a full-year recession in 2025, and the adverse effects on global growth and credit conditions become more pronounced, especially for countries with closer trade ties to the U.S.

The third and worst scenario involves an economic and financial crisis. In this case, the announced tariffs are largely permanent and met with retaliatory tariffs by most major economies, including the EU and China. This scenario also assumes that the Trump administration accelerates toward isolationism by imposing capital controls. The rule-based global trade and financial system is at risk of collapse, and confidence in the U.S. dollar as a global safe asset weakens significantly, leading to a major reassessment of U.S. assets and triggering a financial crisis. A further consequence would be a deep U.S. recession in 2025–2026. The magnitude of the crisis in such a scenario creates significant credit risks for many countries.

Scope notes that the ultimate impact on growth, inflation, public debt, and other indicators that influence credit ratings will depend on the macroeconomic environment shaped by U.S. policies, the reactions of trade partners, and each country’s underlying strengths and vulnerabilities before the trade shock.

The extent to which U.S. policy affects other countries will depend on their reliance on exports to the U.S. and their financial linkages.

The most exposed countries in terms of dollar-denominated exports are China, Mexico, Canada, and Germany. In terms of GDP share, the most exposed are Vietnam (with exports to the U.S. accounting for 26% of GDP), Canada (20%), Ireland (12%), and Thailand (10%).

Regarding exposure to the U.S. banking system, the most affected are G7 countries—led by Japan, followed by the United Kingdom, Canada, France, and Germany.