U.S. Trade War Escalates: Economic Shockwaves and Industry Pushback

May 6, 2025

The U.S. trade war is heating up once again—and it’s no longer just a matter of diplomacy. New tariffs are already sending tremors through the economy, with ripple effects hitting industries from tech to entertainment.

Economy Under Pressure

New data confirms what many feared: the cost of tariffs is landing hard. According to the Yale Budget Lab, the 2025 tariffs alone have shaved nearly 0.9 percentage points off GDP growth and could leave the U.S. economy permanently 0.6% smaller—a loss of over $160 billion annually. Exports? Down a painful 18.1%.

And it doesn’t stop there. The Penn Wharton Budget Model warns of a 6% long-term GDP decline, a 5% wage cut, and a lifetime earnings loss of $22,000 for the average middle-income American household. The message is clear: the trade war is no longer theoretical—it’s personal.

Business Leaders Raise the Alarm

At the 2025 Milken Institute Global Conference, CEOs and investors voiced growing anxiety over the administration’s unpredictable tariff playbook. Some called for patience and resilience; others warned of investment delays and mounting operational costs. (Reuters)

One particularly controversial proposal: a 100% tariff on foreign-produced films. The entertainment industry immediately reacted—Netflix and IMAX shares tumbled, and the S&P 500 slipped 0.6%. Treasury Secretary Scott Bessent tried to calm markets, insisting the move aims to protect American cultural exports. (The Times)

A Global Chain Reaction

The global economy isn’t immune. Analysts note that U.S. tariffs are already disrupting global supply chains and manufacturing output. (Reuters)

And the implications of targeting intellectual property and services—like film and media—are murky. Since services now make up the majority of U.S. GDP, retaliation from allies could cut deeper than expected. (Axios)

Bottom Line: The tariff strategy might play well politically, but the numbers are sobering. As economic uncertainty grows, businesses, investors, and everyday Americans are all asking the same question: How far will this go?