1

Assessment 3 Information
Subject Code: ECOM4000
Subject Name: Economics
Assessment Title: Individual Assignment
Assessment Type: Assignment
Written by: Harman Singh

AT03_HARMANSINGH_1857911
 2

CONTENT:
SECTION A - MICROECONOMICS
1. QUESTION
1ST………………………………………………………………………………………
3
1.1 CHARACTERISTICS OF AN OLIGOPOLISTIC MARKET…………………….…………………….. 3
1.1.1. A few sellers but many
buyers………………………………………………………….…… 3
1.1.2. Similar and/or Identical
Products……………………………………………………….…. 3
1.1.3. Interdependence……………………………………………………………..
…………………... 3
1.1.4. High
Barriers…………………………………………………………………………………………. 3
CONCLUSION……………………………………………………………………….………………………..………….. 4
2. QUESTION 2ND.......................................................................................................... 5
2.1 REASONS FOR PRICE INCREASES……………………………………….……………………………… 5
2.2 Effects on Market Position & Profitability…………………………………….…………………… 5
CONSLUSION……………………………………………………………………………………….…………………….. 6
3. QUESTION 3RD………………………………………………………………………………………………………… 7
3.1 PAYOFF MATRIX & NASH EQUILIBRIUM……………………………….……………………………. 7
3.2 DOMINANT STRATEGIES & BEST OUTCOME…………………………………………….…. 8
3.3 PRISIONER’S DILEMMA & FINAL ANSWER…………………………………………………. 9

SECTION B - MACROECONOMICS
QUESTION 1
TARIFFS ON IMPORT AND ECONOMIC EFFECTS Q

QUESTION 2
QUESTION 3

AT03_HARMANSINGH_1857911
 3

REFERENCE LIST

Section A – Microeconomics
Question 1
Identify the market structure Coles and Woolworths operate in. Make sure you justify your choice
of market structure using all the market characteristics used to classify markets. Using your own
independent research, provide some facts and brief comments on this market (for example, you
may like to discuss metrics like the concentration ratio).

Coles and Woolworths operate in an Oligopolistic Market Structure in Australian supermarket

industry. The reason is in below which justify the key points of market structure characteristics:

Characteristics of an Oligopolistic Market Structure:

1. A few sellers but many buyers: In Australian supermarket sector, because there is limited
competition, Coles and woollies together controlling most of the market shares which are
approximately 65% (Coles 27%, Woolworths 37%) while the other like ALDI holds 9% and the
IGA contributes 7% of their share in market. This means Woollies and Coles are the main and
players in the Australian Market. (ACCC, 2025)
2. Similar and/or Identical Products: Even the Coles and Woollies sell the same products like
milk, butter, eggs etc. But the branding, store layouts, and labels makes them different.
3. Interdependence: Interdependence means businesses react to each other's actions. For
example, if Coles lowers bread prices, Woolworths quickly does the same to avoid losing
customers to cheaper alternatives. (ACCC, 2025b)
4. High Barriers: High barries for entry makes hard for the fresh players to compete with main
or old player (like Coles and Woolworths). The reasons are following:
i. Financial Barriers - Financial Barriers make it too expensive for new supermarkets to
compete. For example, opening just one store costs millions for land, shelves, and stock
but Coles & Woolworths have many stores. They also spend billions on ads and loyalty
programs that small rivals cannot afford. Even basic costs like staff wages and electricity
are harder for new stores to pay while keeping prices low. It costs too much money for
the new players to open many stores and set-up supply chain like Coles and Woolworths
already have. (Baker, M.)
ii. Resources Barriers – Coles and woollies already using the best options in resources,
like land, labour and capital. For example, the locations of their stores are in the big malls
where there are a lot of people available. Not only this the location of their stores in
these malls near the entrances where the people in malls get first view of these stores.
As they are holding many customers to fulfil the stock and the need of customers they
have their own transportation system, and long-term contracts with dairy farmers and

AT03_HARMANSINGH_1857911
 4

other suppliers. These kind of options and resources do not have the new players.
(Nicholls, R. 2024)
iii. Natural Barriers - Big supermarkets like Coles and Woolworths get cheaper prices
because they buy so much. For instance, when they order milk for their stores, they pay
less per bottle than small shops can, due to buy in a bulk. Their delivery trucks also save
money to by supplying many stores at once. The bigger they are, the more they save on
everything they buy. (ACCC, 2025c)
iv. Legal or Manmade Barriers - Sometimes Government rules & regulations, and their
permissions make it harder for the new players to enter in the market. Example, in 1998,
the U.S. government sued Microsoft because it was using unfair tricks with its Windows
software. Most computers used Microsoft's Windows. Microsoft made computer makers
put Internet Explorer on them. They made it tough to use other browsers like Netscape.
They also hide Windows code to stop other programs from working. It was like cheating
to win every time. Similarly, Australia's supermarket rules about leases and permits
accidentally help Coles and Woolworths to stay on top, and it makes market entry harder
for others. (ACCC, 2025d)

Conclusion
In conclusion, Coles and Woolworths work in an oligopoly market in Australia’s supermarket
business. This means only a few big companies, like Coles and Woolworths, control most of the
market, holding about 65% of it. They sell similar things, like milk and bread, but with different
names or labels. When one changes prices, the other does too, because they watch each other
closely. It’s hard for new shops to join because it costs a lot of money to open stores, get good
locations, buy in bulk, or follow government rules. This keeps Coles and Woolworths as the main
players, making it tough for others to compete.

AT03_HARMANSINGH_1857911
 5

Question 2
Because of their market positions, Coles and Woolworths exhibit a great deal of price
interdependence and actively advertise against each other. In recent times, both
supermarkets have increased their pricing. Explain the reasons for this and the effect you
think it has had on the market position and profitability of both Coles and Woolworths.
Coles and Woolworths function within a highly concentrated Oligopoly, where their pricing strategies
are interlinked due to shared market dependence. In recent years, both have raised prices,
influenced by several major factors.

1. Reasons for Price Increases Rising Costs

A. Rising Costs
a. Global Factors
 The war in Russia and Ukraine disrupted the supply of wheat, cooking oil and fertilizer,
driving up the costs of those imports.
 U.S. tariffs (from 2025) on products such as coffee and canned goods increased the relative
cost of imported goods. (Terzon, E 2025a)
b. Local Factors
 Storm damage (floods/cyclones in 2025) spoiled crops, causing prices of fresh produce to
rise.
 Added to the costs of operation were higher wages and electricity costs. (Terzon, E 2025b)
B. Price Leadership and Interdependent Pricing
a. Following the Market leader: Woolworths is the larger of the two and we notice
Woolworths is the one with higher prices that Coles follows. (ACCC 2025e)
b. Avoiding Price Wars: Neither reduces prices, for the other would do so and be matched,
giving up the competitive advantage. (Neo, P. 2025)
c. Price Stability: Similar Pricing But with some external costs that make for additional costs in
one. (ACCC, 2025f)
C. Profit Protection Strategies
a. Balanced Pricing: Discounts on some items lure customers, while increase on the price of
others protect margins. (Grigg, A., Potaka, E. and Hildebrandt, C. (2024))
b. Private Labels: Advertise and keep top of shelf the store brand (better margin). (Neo, P.
2025)
c. Limited Competition: When options are scarce, shoppers have to take what they can - and
pay higher prices for it. (Byron, 2025)

2. Effects on Market Position & Profitability

A. Market Position

AT03_HARMANSINGH_1857911
 6

a. Stronger Dominance: High prices ensure lesser competitors (Aldi, IGA) find it harder to
challenge, cementing that price oligopoly. (Byron, 2025)
b. Consumer Dependence: Out of annoyance, I use Coles/Woolworths because it is easier
and they are everywhere. (Flemming, T. 2025b)
B. Profitability
a. The Short-Term Gains: Passing costs along to consumers saves profit margins intact.
b. Private Label Expansion: More consumers are trading down to lower-cost in-house brands,
driving profitability.
C. Risks & Challenges
a. Public Outrage: "Price gouging" allegations have resulted in government inquires.
b. Regulatory Risks: Tighter regulations (e.g., price controls, asset divestitures) could occur if
they were deemed to be exploitative.
c. Long-term Loss of Trust: Customers’ brand loyalty will erode if high prices remain, and if they
find alternatives.

P1 Sticky Price

Pe

0 Q1 Qe Q

(Kinked Diagram Curve)

Conclusion: Prices were driven up by Coles and Woolworths because of input costs, reciprocal
pricing strategies and defending profits. Although this has increased their market power and
immediate gains, it exposes them to regulation and consumer backlash, if they come to be viewed as
unfair.

AT03_HARMANSINGH_1857911
 7

Question 3
Consider a “game” between Coles and Woolworths that the supermarkets may participate
in. The rules of the game are: If both Coles and Woolworths keep prices low, then they will
both make a profit of $5,000m. If both Coles and Woolworths keep prices high, then they
will both make a profit of $8,000m. If one supermarket keeps prices low and the other
keeps prices high, then the low-price supermarket will make $9,000m profit and the high
price supermarket will make $4,500m profit. Using these rules, solve this game for the
Nash equilibrium (make sure to include your diagram and the logic you followed to solve
the game). Is your outcome the best one for both Coles and Woolworths? Explain your
answer.
To resolve the competition between Coles and Woolworths in pricing we compute the Nash
Equilibrium in the given payoff structure. In the following game each supermarket decides if it will
keep its prices either Low or High and the profits (in $ millions) per supermarket are for each
decision: Both Low: Both earn $5,000m. Both High: Both earn $8,000m.

Payoff Matrix
Now we represent the game in a payoff matrix, with Coles and Woolworths choosing rows and
columns. The payoffs are (Coles, Woolworths) in millions of dollars.
Woolworths: Low Woolworths: High

Cost: Low Coles: 5,000 Coles: 9,000

Woolworths: 5,000 Woolworths: 4,500

Cost: High Coles: 4,500 Coles: 8,000

Woolworths: 9,000 Woolworths 8,000

Game Theory

Game theory studies the strategic choices where each supermarket’s payoff depends on
both their own and the other’s decision. The goal is to find the Nash equilibrium, where
neither has an incentive to change their strategy unilaterally.

Nash Equilibrium
A Nash equilibrium happens when he each player (Coles and Woolworths) choose the best action
based on what the others does. This means they get the best possible outcome, no matters what the
other players decides to do.

AT03_HARMANSINGH_1857911
 8

 Coles’ Best Responses:

 If Woolworths chooses Low:
o Coles chooses Low: $5,000m.
o Coles chooses High: $4,500m.
o Best answer: Low (5,000 > 4,500)

 If Woolworths chooses High:

o Coles chooses Low: $9,000m.
o Coles chooses High: $8,000m.
o Best answer: low (9,000 > 8,000)

 Woolworths’ Best Responses:

 If Coles chooses Low:
o Woolworths takes the Low Road: $5,000m.
o Woolworths opts for High: $4,500m.
o Best answer: Low (5,000 > 4,500)
 If Coles chooses High:
o Woolworths opts for Low = $9,000m
o Woolworths opts for High: $8,000m.
o Best answer: Low (9,000 8,000)

In both cases, choosing Low is the best response for each supermarket, regardless of the
other’s choice. Thus, (Low, Low) is the Nash equilibrium, where both earn $5,000m.

Dominant Strategies
A strategy is dominant if it is always better, regardless of the opponent’s choice. For Coles, choosing
Low yields:

 $5,000m (vs. $4,500m) when Woolworths chooses Low.

 $9,000m (vs. $8,000m) when Woolworths chooses High.

Low strictly dominates High for Coles. Similarly, for Woolworths, Low yields:

 $5,000m (vs. $4,500m) when Coles chooses Low.

 $9,000m (vs. $8,000m) when Coles chooses High.

Low also strictly dominates High for Woolworths. Since both have a dominant strategy of Low, the
outcome (Low, Low) is the unique Nash equilibrium.

AT03_HARMANSINGH_1857911
 9

Best Outcome for both

The Nash equilibrium is (Low, Low) with payoffs ($5,000m, $5,000m). However, if both choose High,
High, they earn ($8,000m, $8,000m), which is better for both ($8,000m > $5,000m). The total joint
profit is also higher:

 Low, Low: $5,000m + $5,000m = $10,000m.

 High, High: $8,000m + $8,000m = $16,000m.

Thus, (High, High) is the best outcome for both in terms of individual and joint profits. However, it is
not a Nash equilibrium because each supermarket has an incentive to deviate:

 If Coles chooses High and Woolworths deviates to Low, Woolworths earns $9,000m (vs.
$8,000m), and Coles earns $4,500m (vs. $8,000m).
 Similarly, Coles will deviate to Low if Woolworths chooses High.

Prisoner’s Dilemma
This game shows a Prisoner’s Dilemma, since both could win more by cooperating, but they both try
to better on their own and end up worse off.

Collusion

If they both play High then they both some $8,000m (which is better than the $5,000m they'd get
otherwise).

 Barriers to Collusion:
1. Incentive to cheat: Both firms can individually make a higher profit ($9,000m) by setting
price lower in the following period.
2. Legal Risks: Overt collusion is illegal under antitrust laws.
3. Enforcement: Tacit collusion (e.g., price signalling) is inherently unstable without legally
binding terms.
 Repeated Game Solutions:
1. Tit-for-Tat: Cheating is punished in kind by copying a rival’s last move.
2. Trigger Strategies: Adopt the Low level price permanently if the competitor undercuts.

Final Answer
The Nash equilibrium is (Low, Low), with both Coles and Woolworths earning $5,000m. This is not
the best outcome, as (High, High) yields $8,000m each, maximizing joint and individual profits.
However, (High, High) is unstable due to the incentive to undercut prices, making (Low, Low) the
equilibrium despite being less efficient.

AT03_HARMANSINGH_1857911
 10

Section B – Macroeconomics
The Trump Administration in the US is set to introduce a range of new economic policies. Three of
the more important of these are:

1. The threat to impose tariffs on a range of imports into the US.

2. A reduction in tax rates.

3. A crackdown on illegal migration into the US.

Question 1
Using your own independent research, briefly summarize and explain the proposed Trump policies,
including those listed above, and the effect you think they will have on the US economy. At a
minimum, your answer should include commentary about the effect on US GDP, unemployment,
inflation and other aspects of the US macroeconomy. Support your comments with appropriate
economic data. (Make sure you use reputable economic sources and reference your sources.) (9
marks)

Here is a brief overview with analysis of three potential economic policies that Trump
Administration has put forward in 2025 which are tariffs on imports, tax cuts and a crackdown on
illegal immigration, and how such policies would affect the US economy, including GDP,
unemployment, inflation, and other macroeconomic variables. It is based on credible economic
analysis and buttressed by facts.

1. Tariffs on Imports
Quarterbacking tariffs President Trump has enacted and proposed substantial tariffs to correct trade
imbalance and encourage manufactures take place at home. A 10% baseline tariff on all imports was
imposed by the International Emergency Economic Powers Act (IEEPA) starting on April 5, 2025, with
higher tariffs targeting countries with large U.S. trade deficits (up to 145% on Chinese goods, later
modified) starting April 9, 2025. These tariffs also are intended to help bring down nearly $1.2 trillion
goods trade deficit (2024) and to respond to other countries' practices, such as currency
manipulation and foreign value-added taxes (VAT). There are exemptions for steel, aluminium,
semiconductors and some minerals. The policy is designed to encourage more U.S. production but
runs the risk of trade retaliation and darkening the various supply chains that critics say complicate
the reliability of U.S. imports.

Economic Effects:

 GDP: The Penn Wharton Budget Model projects these tariffs could decrease long-run GDP by 6
to 8%, and would be expected to reduce dynamic revenues by $4.5 to $5.2 trillion over 10 years
as increased costs reduce economic openness and capital flows. The Tax Foundation estimates a
0.8 to 1.0% drop in GDP in 2025 with approximately $330 billion in CN retaliatory tariffs on U.S.
exports. (Reichling, F. 2025)

AT03_HARMANSINGH_1857911
 11

 Unemployment: Tariffs can protect some manufacturing jobs but raise costs for industries that
depend on imports, which could result in the loss of jobs. The Tax Foundation expects a 142,000
reduction in full-time employment from costlier prices and lower output.
(York, E., Durante, A. (2025))
 Inflation: Consumer prices are expected to rise as a result of the tariffs, with Goldman Sachs
estimating a 0.1% rise in core PCE prices for every 1% increase in effective tariff rates. The Yale
Budget Lab estimates that the price will rise by nearly 1.7 to 2.1% and low-income households
will each have to pay an extra $1,000–$2,148 a year. Inflation could jump from 2.4% (in the
November 2024) to 3.4 to 4% by the end of 2025. (Cass, O., Furman, J., Patterson, R., and
Summers, J.H. (2025))
 Other Consequences: There are a number of key macroeconomic indicators that are affected by
tariffs. Before Tariffs: The trade deficit sat at $1.2 trillion in 2024, due to high reliance on imports.
In 2024, average wages grew moderately (in terms of nominal wages) as inflation. Households
were treading water, with consumer spending steady but February 2025 figure showing a 0.5%
fall in response to the early anticipation of the tariffs. Investment in business increased by 2.1%
in 2024 due to a stable macroeconomic environment but higher than desired by the Economic
Policy Uncertainty Index of 234. Consumer confidence was 64.7 in February 2025, depressed by
economic concerns. Post Tariffs: The trade deficit may shrink 5-10% by 2026 as tariffs drive
production back to the United States, but counter tariffs (China’s 34% on U.S. exports) offset
gains. In this case real wages are stagnant or falling by 0.5–1 percent per annum because
inflation is running ahead of nominal wage growth in protected sectors. Consumer spending
declines by 0.7% by 2025 in response to these higher prices, with the effect disproportionately
hitting lower-income households, which face an additional cost of between $1,000 and $2,148.
Business investment drops by 4.4% in 2025 as uncertainty is much higher as the Economic Policy
Uncertainty Index does not ease. Consumer sentiment falls another 12.6% from Dec.
(Murray, A., 2025)

Macroeconomics Indicators Before Tariffs After Tariffs

GDP 2.8% growth (2024); -0.3% in 0.8-8% long-run decline; 0.8-

Q1 2025 1.0% decline in 2025
Unemployment 4.1% (January 2025) Net loss of 142,000 jobs; 4.1%
may rise slightly
Inflation 2.4% (November 2024) 3.4-4% by end of 2025; 1.7-
2.1% price increase
Other Aspects-
Trade Deficit $1.2T goods deficit (2024) May narrow by 5-10% by 2026.

Wage (Average) Nominal growth 3.2%2 (2024), Real wages stagnate or decline
keeping pace with inflation. 0.5-1% as inflation outpaces
growth.

Consumer Spending Stable, down 0.5% in Jan 2025 Down 0.7% in2025 due to
higher prices

Business Investments Up 2.1% in 2024 Down 4.4% in 2025 due to

uncertainty

AT03_HARMANSINGH_1857911
 12

2. Reduction in Tax Rates

Trump wants to make permanent certain provisions of the 2017 Tax Cuts and Jobs Act (TCJA), one
law that among other things lowered individual tax rates lowered the standard deduction and
expanded the child tax credit. There are other proposals as well, and these are lowering the
corporate rate from 21% to 15% for domestic manufacturers, nixing taxes on Social Security benefits,
overtime and tips. Those reductions are intended to increase consumer and business spending, and
with its economic growth, but risk widening the federal deficit.

Economic Effects:

 GDP: The Penn Wharton Budget Model projects a 0.3% surge in GDP in 2026 from cuts as
consumers and businesses spend more, but says long-term growth could be limited by
enlarged deficits. The Committee for a Responsible Federal Budget projects a $4.1 to $5.8
trillion increase in the deficit over a decade, potentially taking the debt-to-GDP ratio to 132
to 149% by 2035. (Committee for a Responsible Federal Budget, 2025)
 Unemployment: Lower taxes would give a short-run jolt to job creation, especially in
manufacturing and services, but the Wolters Kluwer survey predicts a marginal uptick in the
jobless rate up to 4.3% in 2025 from 4.0 percent in 2024, as disruptions related to tariffs
outweigh gains. (srummani, 2025)
 Inflation: Tax cuts could stimulate demand, putting mild upward pressure on inflation,
although estimates are in a state of disorder. Added to tariffs, inflation could rise above the
Federal Reserve’s 2% target to 3.4%, according to Oxford Economics. Higher-income families
benefit more, with a middle-class family ($80,000 income) receiving $1,740 in 2026 and top
earners (nearly $14M plus) receiving $376,910. (Oxford Economics, 2025)
 Other Effects: Larger deficits would likely push up borrowing costs, propelling bond yields
and mortgage rates higher. The stock market roared after the November 2024 election,
mirroring investor enthusiasm for tax cuts, but volatility continues amid fiscal worries.
(Goldman Sachs, 2025)


Macroeconomics Indicators Before Tax Cuts After Tax Cuts

GDP 2.8% growth (2024); -0.3% in 0.3% boost in 2026; long-term
Q1 2025 growth limited
Unemployment 4.1% (January 2025) 4.3% in 2025 (slight rise due to
tariff disruptions)
Inflation 2.4% (November 2024) 3.4% with tariffs; mild
demand-driven pressure
Other Aspects- Consumer confidence at 64.7% $4.1-$5.8T deficit increase;
(Feb 2025); stock market gains debt-to-GDP ratio 132-149% by
post-election (Nov 2024) 2035; middle class gain
$376,910; higher bond yields,
mortgage rates.

AT03_HARMANSINGH_1857911
 13

3. Crackdown on Illegal Immigration

Macroeconomics Indicators Before Migration Policy After Migration Policy

GDP 2.8% growth (2024); -0.3% in $5.1T reduction by 2028; 0.5%
Q1 2025 growth cut in 2025
Unemployment 4.1% (January 2025) 7.5% by 2026 due to Labor
shortages
Inflation 2.4% (November 2024) 9.1% by 2028; spikes in food,
housing
Other Aspects-
USMCA Trade Stable Strained, 16% GDP hit for
Mexico.
Labour Force Participation 62.5% (2024) Drops to 61.8% by 2026

Wages in Low- Wage Sector 3% nominal growth (2024) 5-7% nominal increase by
2026, real wages lag

Government expenditure on $20.74B (2024) $25-30B/year by 2026

Border Security

Illegal Immigration Rate 700,000 net entries/year Falls to 200,000-300,000 net

(2024) entries/year by 2026.

President Trump seeks mass deportations of millions of unauthorized immigrants and

tougher regulation of legal migration, including - and all this would be with effect from 2025
- to curb competition in the labour market and give preference to American workers. It
would be nearly impossible for this policy not to send shock waves through the likes of
agriculture, construction and hospitality, three industries with considerable immigrant work
forces, with major economic fallout.
Economic Effects:

GDP: Sending home 8.3 million workers could slash GDP by by $5.1 trillion in 2028, and 2025
growth would fall 0.5% because of labour shortages. Mexico could take a 16% hit to its GDP
from decreased United States trade and migration. (Dionysis Partsinevelos, 2025)
Unemployment: May initially free up low-wage jobs, but continued labour shortages could
push unemployment to 7.5 percent by 2026. Unemployment now stands at 4.1% (January
2025). (Duarte F, 2025)
Inflation: A wage-price spiral could lift inflation to 9.1% by 2028, and put greater pressure
on housing and food costs. (Liozu, S.M. 2025)
Other Effects: The crackdown on migration also has big implications for a range of
macroeconomic indicators. USMCA trade relations, which were stable ahead of the policy,
deteriorate, leading to US - Mexico trade disruptions and those which 16% GDP reduction
imposes upon Mexico. Labour force participation, which is 62.5% in 2024, falls to 61.8% by
2026 as 8.3 million workers are deported, reducing the work force. Wages in low wage
industries, which have been running up 3.0% nominally over 2024 with 2.4% inflation, jump
5-7% nominally by 2026 with labour shortages, but real wages are still down 9.1% from

AT03_HARMANSINGH_1857911
 14

inflation. Instead, it is the nearly $21 billion that Uncle Sam spends on border security in
2024 in the fashion of routine enforcement that grows to $25–30 billion per year by 2026
for deportations and tighter policing. Rate of illegal immigration, which is about 700,000 net
enters per year in 2024, drops to 200,000-300,000 by 2026 due to better enforcement, but
not without difficulty. (LeVine, M. 2025)

Wider Macroeconomic Background and Perspective

 Current Economic State: The U.S. economy shrank 0.3% during the first quarter of 2025, the first
decline since 2022, in a reflection of tariff-driven import surges and lower government outlays.
Inflation runs at 2.4%, unemployment is 4.1%, and GDP growth last year was 2.8%.
(Higgins,P. 2025; srummani 2025b)
 Combined Policy: The International Monetary Fund has forecast that U.S. growth will slow to
1.8% in 2025 (from 2.8% in the year before), while global growth will be lower by 0.5%. Those
tariffs and the deportations would most likely fuel stagflation (low growth, high inflation) while
tax cuts could give us some of the usual short-term sugar high but run up the deficits. The
Atlanta Fed’s GDP forecast for Q1 2025 was -2.4%, which could be recession risk.
(PYMNTS, 2025)
 Public Sentiment: Consumer confidence fell to 64.7 in February 2025, the lowest since
November 2023, as the threat of tariffs depressed it. Trump’s approval of his handling of the
economy is 40%, with 66% disapproving of tariffs. (Sherman, E. 2025)

Conclusion
Rocketing Trump’s 2025 economic policies like tariffs, tax cuts and crackdowns on immigration, are
geared at supercharging U.S. industry and job creation, but are fraught with risks. Tariffs could
decrease GDP by 0.8–8%, inflation up to 3.4 to 4%, and jobs, while retaliatory actions could make the
effects even worse. Tax cuts can stimulate short-term growth but expand deficits that might
counteract any benefits. Deportations could shrink G.D.P. by $5.1 trillion and push inflation up to 9.1
percent by 2028, unsettling labour markets. Short-term gains are conceivable, but the policies risk
stagflation, higher costs for consumers and a decline in global competitiveness, with uncertainty
already affecting investment and sentiment.

AT03_HARMANSINGH_1857911
 15

Question 2
Using the aggregate demand and aggregate supply (AD/AS) model, show the effect(s) on the
macroeconomy of each of the three policies stated above. Draw a separate diagram showing the
effect of each of the three policies, and clearly show on your diagrams the before and after cases.
In particular, what do you think will be the ultimate effect on US inflation? (7 marks)

The AD/AS model pretends the macroeconomy with:

 Aggregate Demand: It is defined as the total quantity demand in the total amount of goods
and services that consumptions (C), Investors (I), Government (G), and Net Export (NX)
willing to pay and able to pay at a particular price and time.
 Short-Run Aggregate Supply (SRAS): It is defined as the total quantity supplied in the total
amount of goods & services that all sellers willing to sell and able to sell at a particular period
time and at least one input if fixed.
 Long-Run Aggregate Supply (LRAS): It is defined as the total quantity supplied in the total
amount of goods & services that all sellers willing to sell and able to sell at a particular period
time and at least one input if fixed.
 Equilibrium: It is defined as when aggregate demand (AD) equals Aggregate Supply (AS),
determining the economy’s output (Real GDP) and price level (Inflation).

Both policy measures can alternatively move AD (through C + I + G + X) or SRAS (through the cost of
production or the labour market).

1. Tariffs on Imports
The Trump Administration levies a 10% tariff on all imports using a baseline (as of April 5, 2025) and
higher tariffs (up to 145% on Chinese imports, later adjusted) in an effort to trim the $1.2 trillion
trade deficit and promote goods manufacturing in the U.S. Exemptions are available for steel,
aluminium, semiconductors and certain minerals. These tariffs squeeze import costs, exposing
American companies to retaliation and supply chain ruptures.

 How the Economy Affects by tariffs

 Aggregate Demand (AD):
Short-Run: Imported goods become more expensive due to tariffs, which increases costs for
consumers and businesses that depend on imports like electronics. Consumer spending is 0.7% lower
in 2025 and business investment is 4.4% lower due to uncertainty (Economic Policy Uncertainty Index
at 234). Retaliatory tariffs (like China’s 34 percent on American exports) slow net exports, a drag that
outweighs any domestic demand boost for American-made goods. AD shifts left. (Economic Policy
Uncertainty Index)

Long-Run: Reduced trade openness and capital flows (Penn Wharton Budget Model estimates a 6–
8% decline in GDP over 10 years) decrease productivity, potentially moving LRAS leftward as
potential output decreases. Trade deficit could narrow 5 to 10% by 2026, but retaliation curtails
gains. (Penn, 2025)

 Short-Run Aggregate Supply (SRAS): The aggregate supply that applies in the short run.
Short-Run: Increased prices of imported inputs (e.g. raw materials) raises costs for firms, so SRAS

AT03_HARMANSINGH_1857911
 16

shift to the left. The Tax Foundation projects a 2025 decline of 0.8–1.0% of GDP, and net job loss
of 142,000. (York, E.; Durante, A., 2025)
 Long-Run Aggregate Supply (LRAS): If firms can adapt to higher transportation costs, real
wages could fall, shifting SRAS right, however if tariffs and retaliations are constant, and firms
continue to face higher costs, this could prevent adjustment.
 Equilibrium:
Before the tariffs in Long Run Equilibrium at (AD₀, SRAS₀, LRAS) with P₀, Y₀(output is potential
output, 2.8% growth in 2024).

Short-Run After Tariffs: AD falls to AD₁ (lower consumption, investment, net exports), and SRAS shifts
left to SRAS₁ (higher input costs). Inflation moves up to 3.4‐4% by end of 2025 (Yale Budget Lab
estimates 1.7‐2.1% higher prices), while unemployment nudges up above 4.1%. (Hobijin, B.; Nechio,
F., 2025)

Long-Run After Tariffs: LRAS can move left because of wells becoming less productive because of the
trade barriers. After price adjustment (e.g., the SRAS shifts right as the real wage decreases),
equilibrium shifts. Inflation settles at 3-4% on reduced potential output and continued imported cost-
push inflation.

PL LRAS SRAS PL LRAS SRAS

PLe PLe

PL1

AD AD1 AD

Ye Y Y1 Ye Y

Before AD

PL LRAS SRAS1 SRAS PL LRAS1 LRAS SRAS

PL1

PLe PLe

AD AD

Y1 Ye Y Ye Y

SRAS LRAS

AT03_HARMANSINGH_1857911
 17

Overall Effect on Inflation: Short-run inflation increases to 3.4-4% (cost push, output falls). Over
time, inflation is still high at 3-4% if LRAS shifts leftward, diminished trade capacity maintains high
prices (Penn Wharton Budget Model, 2025).

2. Reduction in Tax Rates

The Trump Administration plan includes, making the 2017 Tax Cuts and Jobs Act permanent, which
cuts individual tax rates, doubles the child tax credit, and cuts the corporate tax rate from 21% to
15% for American manufacturers. Other ideas include ending taxes on Social Security benefits,
overtime and tips to increase demand. These reductions threaten the deficit (between $4.1 trillion
and $5.8 trillion over a decade).

 How the Economy Affects by reduction of tax

 Aggregate Demand (AD):

Short-Run: Lower taxes increase disposable income in the short run (e.g., $1,740 for a middle-class
family in 2026, $376,910 for top earners), spurring consumption. (Petras, G.; Borresen, J.; 2025)
Corporate tax cuts lead to investment, particularly in manufacturing. The Penn Wharton Budget
Model estimates a 0.3% rise in GDP in 2026. AD decreases and thereby shifts rightward even if a fall
in borrowing costs the result of deficits has caused those rates to rise. (Penn; 2025b)

Long-Run: Deficits may reduce growth (debt-to-GDP 132-149% by 2035) but corporate tax cuts may
increase productivity enhancing GDP (shift LRAS right) if investment increases capital stock. The stock
market gains since post-election (November 2024) are a form of near-term optimism. (Committee for
a Responsible Federal Budget; Erb, KP 2025)

 Short-Run Aggregate Supply (SRAS):

Short-Run: SRAS largely unaffected, tax cuts impact mostly on demand. There may be some trickle-
down productivity increases from investment down the road.

Long-Run: Higher Investment may reduce costs of production (e.g. improved technology) and
increase SRAS, but the deficit led rise in interest rates could counteract this. (Committee for a
Responsible Federal Budget)

 Equilibrium:

Before Tax Cuts: Second, let’s assume that equilibrium be at (AD, SRAS, LRAS) at (Y, PL) we have
2.4% inflation.

Short-Run After tax cuts: AD moves to AD₁ (higher consumption and investment). Inflation increases
to 3.4% (with tariffs,), with a 4.3% unemployment rate in 2025 as a result of tariff disruption (Wolters
Kluwer survey). (Kluwer, W. 2024)

Long-Run: LRAS can move right if there is an increase in productivity, or stay at Y if deficits limit
growth. With higher demand, wages will increase, which moves SRAS to the left, thereby pushing
output back to Equilibrium, with inflation at 2.5-3%. (Committee for a Responsible Federal Budget

AT03_HARMANSINGH_1857911
 18

PL LRAS SRAS PL LRAS SRAS

PL1

PLe PLe

AD1

AD AD

Ye Y Ye Y1 Y

(Before the tax reduction Equilibrium) (Impact on AD)

PL LRAS SRAS PL LRAS SRAS1 SRAS

SRAS1

PL1

PLe PLe

PL1

AD AD

Ye Y1 Y Y1 Ye Y

(Impact on SRAS when it moves right) (Impact on SRAS when it moves left)

PL LRAS LRAS1 SRAS

PLe

AD

Ye Y

(Impact on LRAS)

AT03_HARMANSINGH_1857911
 19

Overall Impact on Inflation: Short-Run inflation goes to 3.4 (demand pull from AD shift) Over time,
inflation falls toward 2.5–3 percent if productivity growth pushes LRAS to the right, or stays around 3
percent if deficits raise the cost of borrowing (Committee for a Responsible Federal Budget 2025).

3. Illegal Immigration Suppression

This policy mass deportations of 8.3 million unauthorized immigrants and tougher rules for legal
immigration, beginning in 2025, with far-reaching implications for fields dependent on immigrant
labour, including agriculture, construction and hospitality.

 How the Economy Affects by reduction of tax

 Aggregate Demand (AD):
Short-Run: Deportations contract the labour force (participation rate falls from 62.5% in 2024 to
61.8% by 2026) and household income and consumption. Business output declines, investment
decelerates. USMCA trade disruptions (16% GDP hit to Mexico) slashed net exports. AD shifts to the
left, even though for the remaining workers, their wages are higher (5-7% nominal increase).

(Payan, T.; 2025)

Long-Run: Permanent reduction in labour force reduces potential output, moving LRAS to the left.
The trade disruptions continue, ratcheting down demand even more. (bigseocontact; 2025)

 Short term Aggregate Supply (SRAS):

Short-Run: The deportation of 8.3 million workers shrinks the labour force, leading to labour
shortages, and increasing wages (5-7% nominal increase in low-wage industries) as well as
production costs. SRAS shifts to the left, and GDP falls $5.1 trillion by 2028 and 0.5% in 2025. (ABS
2025)

Long-Run: High wages can create automation or attract workers to come legally, so the SRAS shifts to
the right, but shortages and trade interruptions lag this, burning resources. (Sargen, N.; 2025)

 Equilibrium:
Before the Migration Policy: AD equilibrium at (AD, SRAS, LRAS) at (Y, PL) and inflation is 2.4%.

Short Run After the Migration Policy: AD shifts left (reduced consumption, investment, net exports),
SRAS shifts left (labour shortfall, higher wages). Inflation soars to 9.1% by 2028 (wage-price spiral,
higher food and housing costs), while unemployment reaches 7.5% by 2026. (Pedraza, F1; Morin
2025)

Long-Run: LRAS moves to left, with small labour force. After adjustments (e.g., SRAS shifts to the
right through automation). Highly inflated at 7-9% because of capacity cuts.

AT03_HARMANSINGH_1857911
 20

PL LRAS SRAS PL LRAS SRAS

PLe PLe

PL1

AD AD1 AD

Ye Y Y1 Ye Y

(Before) (AD)

PL LRAS SRAS1 SRAS PL LRAS1 LRAS SRAS

PL1

PLe PLe

AD AD

Y1 Ye Y Ye Y

(SRAS) (LRAS)

Net Ultimate Inflation Effects: Short-Run inflation surges to 9.1% by 2028. In the long run, inflation
remains high at 7-9% if LRAS shifts left, in part because of labour shortages, which however may
reduce somewhat with automation.

AT03_HARMANSINGH_1857911
 21

Question 3
Given your answer to Question 2 with respect to US inflation, explain what policy
response the US Federal Reserve might implement. Show the likely impact of this policy
response on the macroeconomy using the AD/AS model.

Federal Reserve Response to Inflation

The three combined policies- tariffs on imports, reducing tax rates, and illegal immigration, are very
inflationary as you describe. Tariffs raise inflation to 3.4-4% in 2025 due to cost push effects, tax cuts
raise inflation to 3.4% due to demand pull, immigration suppression raises inflation to 9.1% in 2028
due to labour shortage and wage-price spirals. Since inflation is running well above the Federal’s 2%
target, especially due to the massive supply-side immigration policy shock, the Federal is likely to
resort to contractionary monetary policy. This will mean raising the Federal Funds rate to make
borrowing more expensive, reduce aggregate demand, and the open market operations (selling
government securities) to decrease the money supply. The aim is to stabilize the economy and bring
inflation down to 2%, stabilising prices and minimising the risk of a wage-price spiral, even if this
results in short-term unemployment and lower output.

Impact on the Macroeconomy Using the AD/AS Model

Before: The economy is in an inflationary gap

The economy is in an inflationary gap, with actual output (Real GDP) greater than potential output,
and inflation that is above the Federal’s 2% target. In the AD/AS model this happens when the shifts
of the AD and SRAS curves cause an equilibrium that is at near the LRAS line. The three policies add
as follows: tariffs cause SRAS curve to shift left as input prices rise and prices rise (3.4-4% inflation),
tax cuts cause AD curve to shift right as consumption and investment rise, creating demand-pull
inflation (3.4%), immigration suppression causes SRAS curve to slam to the left as labour shortage
causes prices to soar to 9.1% by 2028. The economy is found in short-run equilibrium (Y₁ > Y₀,
potential output), with high price levels (e.g., inflation of 9.1%) and also elevated unemployment
(4.1-7.5%) symptomatic of the supply constraints.

The inflationary gap is explained by the AD/AS model. AD is the sum of all consumption, investment,
government and foreign demand for goods and services (C + I + G + NX) at a given price. A right shift
in AD, which occurs in the case of tax cuts, leads to more output and higher prices, and results in the
economy operating above potential output. Short-Run Aggregate Supply (SRAS) is the total output
that firms can produce without having to adjust or change their costs of production with at least one
factor of production fixed. Leftward shifts in SRAS, due to tariffs and reduced immigration, increase
production costs, lower output, and raise prices. And the Long-Run Aggregate Supply (LRAS) curve is
our Potential output, where every input and resources are flexible, and the economy is in full
employment (around 4% unemployment). When AD meets SRAS to the right of LRAS (and not at
LRAS), then there is an inflationary gap showing that the economy is overheating.

The consequences of the inflationary gap are dire. Higher prices undermine purchasing power,
especially among poor households dependent on goods subject (tariffs) or necessities like food and

AT03_HARMANSINGH_1857911
 22

housing. In the wage-price spiral of the immigration suppression, modest domestic nominal wage
growth of 5-7% in low wage sectors are sending costs to inflation as companies transfer the
increased labour costs onto the consumer. According to the Penn Wharton Budget Model, tariffs
could cost 6-8% of GDP over 10 years, and immigration policies could decrease GDP by $5.1 trillion
by 2028. Unemployment rises as firms confront higher costs and diminished trade which upset
output (e.g. 7.5% unemployment by 2026).

This gap strains monetary policy. The Federal Reserve now faces a difficult trade-off, if it accepts high
inflation, people may except prices to keep rising, but if it raises rates too aggressively, it could hurt
jobs and economic growth. The inflationary position of the economy relative to potential is
unsustainable, for resource constraints, such as labour shortages, will prevent sustained
overproduction. Without policy intervention, inflation could stabilize at 7-9% (immigration policy) or
3-4% (tariffs and tax cuts), well above the 2% target that would require aggressive policy actions to
bring it down.

PL LRAS1 LRAS2 SRAS

PL1

PLe

AD AD1

Ye Y1

After: The Federal Reserve’s response by raising cash rates

Open Market Operations: The Fed borrows against its holding of government bonds, decreasing
the money supply. Banks buy these bonds, reducing the amount they have left in reserves, which
lifts the federal funds rate (the rate at which banks lend to one another overnight). This squeezy
liquidity means that borrowing becomes more costly throughout the economy.

Cash rate

buy sale

Quentity of monet

AT03_HARMANSINGH_1857911
 23

Transmission Mechanism: Higher rates of interest crook the economy through a number of routes.

 Cash Flow: Increasing borrowing costs curtail consumers’ discretionary income as the
amount of loan payment (e.g. mortgage, credit cards) increases. It becomes more expensive
for businesses to finance operations or expansion, because financing costs rise and cash flow
available for investment falls. Your analysis observes that consumption falls 0.7% and
investment falls 4.4% post-tariffs; higher rates exacerbate this, and so exacerbate the
reduction in spending.
 Borrowing Costs: Higher interest rates lift the cost of borrowing for households and
businesses. People and companies buy fewer big-ticket items like cars and homes, and firms
rein in investment on machinery. By this contraction, AD shifts to the left, and it largely
offsets the Penn Wharton Budget Model’s projected 0.3% rise in GDP from tax cuts in 2026.
 Asset Prices: High interest rates reduce the discounted present value of future cash, which
making stocks and bonds become less valuable. This wealth effect discourages consumer
spending as households feel less well off. Post-election stock market surge (Nov 2024) would
be reversed adding to consumption reduction and investment decline.
 Exchange: Rates Higher interest rates bring money across borders, which pumps up the
dollar value. This makes exports more expensive and imports less expensive, which helps NX
a little; however, tariff-related trade disruptions (e.g., USMCA drag from immigration policy)
somewhat tamp down this effect. A higher dollar also helps to tamp down some of the
inflation imported by tariffs.

PL LRAS SRAS

PL1

PLe
AD2 AD1

AD AD4 AD3

Ye Y1 Y

Reference list
ACCC (2025a). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:

AT03_HARMANSINGH_1857911
 24

https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

ACCC (2025b). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

ACCC (2025c). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

ACCC (2025d). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

ACCC (2025e). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

ACCC (2025f). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

ACCC (2025g). ACCC recommends supermarket reforms to provide better outcomes for consumers
and suppliers. [online] Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/media-release/accc-recommends-supermarket-reforms-to-provide-better-
outcomes-for-consumers-and-suppliers.

Baker, M. (n.d.). Economic Analysis of an Oligopoly Market Structure | Bartleby. [online]

www.bartleby.com. Available at: https://www.bartleby.com/essay/Economic-Analysis-of-an-
Oligopoly-Market-Structure-P3CVT2LK6ZZS.

Byron (2025). National food security preparedness Green Paper - ASPI. [online] ASPI. Available at:
https://www.aspi.org.au/report/national-food-security-preparedness-green-paper [Accessed 23 May
2025].

AT03_HARMANSINGH_1857911
 25

byron (2025). National food security preparedness Green Paper - ASPI. [online] ASPI. Available at:
https://www.aspi.org.au/report/national-food-security-preparedness-green-paper [Accessed 23 May
2025].

Flemming, T. (2025a). Australians eating less chocolate but more meat, latest Australian Bureau of
Statistics report says. [online] Abc.net.au. Available at: https://www.abc.net.au/news/2025-food-
consumption-report-abs/105106950 [Accessed 23 May 2025].

Flemming, T. (2025b). Australians eating less chocolate but more meat, latest Australian Bureau of
Statistics report says. [online] Abc.net.au. Available at: https://www.abc.net.au/news/2025-food-
consumption-report-abs/105106950.

Grigg, A., Potaka, E. and Hildebrandt, C. (2024). Supermarket Industry Insiders Reveal How Coles
and Woolworths Profit off Rising Prices. ABC News. [online] 19 Feb. Available at:
https://www.abc.net.au/news/2024-02-19/coles-woolworths-supermarket-prices-profit-four-corners/
103469300.

Neo, P. (2025a). Australia supermarket report: More grocery competition needed to break
‘oligopoly’ but barriers may be too high. [online] FoodNavigator-Asia.com. Available at:
https://www.foodnavigator-asia.com/Article/2025/04/02/australia-supermarket-report-more-grocery-
competition-needed-to-break-oligopoly-but-barriers-may-be-too-high.

Neo, P. (2025b). Australian food industry urges more targeted government assistance after Budget
2025. [online] FoodNavigator-Asia.com. Available at:
https://www.foodnavigator-asia.com/Article/2025/04/21/australian-food-industry-urges-more-
targeted-government-assistance-after-budget-2025 [Accessed 23 May 2025].

Nicholls, R. (2024). ‘Concerning’: ACCC interim report on supermarket inquiry tells of supplier
woes and ‘oligopolistic’ market. [online] The Conversation. Available at:
https://theconversation.com/concerning-accc-interim-report-on-supermarket-inquiry-tells-of-supplier-
woes-and-oligopolistic-market-239931.

Terzon, E. (2025a). Do Woolworths and Coles have a duopoly? The ACCC will soon deliver its
verdict in supermarket report. [online] Abc.net.au. Available at: https://www.abc.net.au/news/2025-
03-20/accc-supermarkets-inquiry-coles-woolworths-competition/105024492 [Accessed 23 May
2025].

Terzon, E. (2025b). Do Woolworths and Coles have a duopoly? The ACCC will soon deliver its
verdict in supermarket report. [online] Abc.net.au. Available at: https://www.abc.net.au/news/2025-
03-20/accc-woolworths-coles-supermarket-competition-inquiry/105024492.

AT03_HARMANSINGH_1857911
 26

Cass, O., Furman, J., Patterson, R. and Summers, L.H. (2025). Opinion | ‘I Hope I Am Wrong, but I
Am Pretty Pessimistic’: Four Economists Dissect Trump’s Tariffs. The New York Times. [online] 11
Apr. Available at: https://www.nytimes.com/2025/04/11/opinion/tariffs-pause-reversal-markets.html.

Committee for a Responsible Federal Budget. (2024). Donald Trump | Committee for a Responsible
Federal Budget. [online] Available at: https://www.crfb.org/issue-area/donald-trump [Accessed 26
May 2025].

Dionysis Partsinevelos (2025). How mass deportations could impact the US economy. [online] Invezz.
Available at: https://invezz.com/news/2025/04/17/what-is-the-real-economic-impact-of-mass-
deportations-in-the-us/.

Duarte, F. (2023). The Latest Labor Shortage Trends & Statistics (2024). [online] Exploding Topics.
Available at: https://explodingtopics.com/blog/labor-shortage-stats.

Goldman Sachs (2025). Why the US economy may grow more slowly than expected. [online]
Goldmansachs.com. Available at: https://www.goldmansachs.com/insights/articles/why-the-us-
economy-may-grow-more-slowly-than-expected.

Higgins, P. (2025). Challenges in Forecasting GDP Growth Last Quarter and This Quarter. [online]
Atlantafed.org. Available at: https://www.atlantafed.org/blogs/macroblog/2025/05/14/challenges-in-
forecasting-gdp-growth-last-quarter-and-this-quarter [Accessed 26 May 2025].

LeVine, M. and Goodwin, L. (2025). House GOP budget adds $150 billion for Trump’s immigration
enforcement. [online] The Washington Post. Available at:
https://www.washingtonpost.com/immigration/2025/05/23/house-gop-budget-immigration/ [Accessed
26 May 2025].

Liozu, S.M. (2024). 2025 Inflation: Challenges Ahead Despite Signs of Moderation. [online]
Zilliant.com. Available at: https://zilliant.com/blog/2025-inflation-challenges-ahead-despite-signs-of-
moderation.

Murray, A. (2025). US and China hit the pause button on trade war for 90 days, as talks continue |
The Highland County Press. [online] The Highland County Press. Available at:
https://highlandcountypress.com/headlines/us-and-china-hit-pause-button-trade-war-90-days-talks-
continue [Accessed 26 May 2025].

Oxford Economics. (2025). Inflation Archives. [online] Available at:

https://www.oxfordeconomics.com/topic/inflation/.

AT03_HARMANSINGH_1857911
 27

PYMNTS (2025). IMF Cuts 2025 US Growth Forecast to 1.8% Amid Tariff Uncertainties |
PYMNTS.com. [online] PYMNTS.com. Available at: https://www.pymnts.com/economy/2025/imf-
cuts-2025-united-states-growth-forecast-amid-tariff-uncertainties/ [Accessed 26 May 2025].

Reichling, F. (2025). The Economic Effects of President Trump’s Tariffs. [online] Penn Wharton
Budget Model. Available at: https://budgetmodel.wharton.upenn.edu/issues/2025/4/10/economic-
effects-of-president-trumps-tariffs.

Sherman, E. (2025). Atlanta Fed’s GDP Growth Predictor Says Q1 Rate Was -2.8%. [online] Forbes.
Available at: https://www.forbes.com/sites/eriksherman/2025/04/01/atlanta-feds-gdp-growth-
predictor-says-q1-rate-was28/.

srummani (2025a). 2025 State of the Industry Report - American Composites Manufacturers
Association. [online] American Composites Manufacturers Association. Available at:
https://acmanet.org/2025-state-of-the-industry-report/.

srummani (2025b). 2025 State of the Industry Report - American Composites Manufacturers
Association. [online] American Composites Manufacturers Association. Available at:
https://acmanet.org/2025-state-of-the-industry-report/.

York, E. and Durante, A. (2025). Tracking the Economic Impact of the Trump Tariffs. [online] Tax
Foundation. Available at: https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/.

AT03_HARMANSINGH_1857911