A line chart illustrates the estimated impact of effective tariff rates on Vanguard’s forecasts for U.S. GDP growth and inflation. The effective tariff rate on the x-axis ranges from 0% to 30% in increments of 5%. The y-axis represents our forecasts for U.S. GDP growth and inflation on a scale ranging from –1% to 5%. At a 0% tariff rate, the lines for GDP and inflation are both at 2.5%. As the tariff rate increases, the line representing GDP generally decreases, eventually dropping below 0% as the tariff rate reaches 28%. In contrast, the line representing inflation generally increases with the tariff rate, peaking at 4.6% as the tariff rate reaches 30%. At the beginning of 2025, our assumptions were an effective tariff rate of 2%, GDP of 2.32%, and inflation of 2.64%. In early April, our assumptions were an effective tariff rate of roughly 25%, GDP of 0.16%–0.34%, and inflation of 4.18%–4.32%. Our current 2025 year-end assumptions are for an effective tariff rate of around 12%–13%, GDP of 1.33%–1.42%, and inflation of 3.34%–3.41%.