Trump's New Tariffs Will Upend the Global Economy, - Bloomberg
Date: 2025-04-02 Author: Кирило Загоруйко Categories: ECONOMY
US President Donald Trump intends to introduce the most extensive trade restrictions in the last century. This step will fundamentally change the global trading system and create difficult to predict economic risks.
According to Nomura Holdings Inc. Chief Economist Rob Subbaraman, the lack of details about the structure, size and purpose of the tariffs has left the world "in the dark".
According to Bloomberg, about $33 trillion of global trade will be targeted, and countries from Brazil to China face a reduction in exports to the United States of between 4% and 90%. The Global Trade Policy Uncertainty Index soared to its highest level since 2009 on April 1.
The average U.S. tariff for all countries will likely rise by 15 percentage points this year, according to economists at Goldman Sachs Group Inc., pushing up core inflation, weakening growth and raising the risk of recession.
Trump has said his so-called retaliatory tariffs will target barriers that trading partners impose on American companies, including what officials consider excessive trade surpluses with the U.S. and certain product-level taxes and fees.
A maximum approach would raise average U.S. tariff rates to 28 percentage points, according to Bloomberg, which would reduce U.S. GDP by 4% and raise prices by nearly 2.5% over two to three years.
The impact on trading partners in any scenario would be severe. China, the EU and India could lead the list of countries that would suffer the impact on U.S. exports, though their economies could survive. Canada and Southeast Asian countries would likely feel a bigger impact.
Stagflation is also a concern. However, much depends on unknowns – many of which are unlikely to be announced, including the exact final tariff rates on products and countries, retaliatory measures from trading partners, and the reaction of businesses and consumers.
It is worth noting that in the first three months of this year, US stocks have performed the worst since 2023, even as the world has seen gains. US Treasuries have risen almost 3%, thanks to growing concerns about economic growth. Gold has reached record highs, and the dollar has weakened.
Many US companies have expressed concern that new tariffs will lead to higher costs and reduced profits. Foreign executives are being forced to weigh whether to move at least some production to the US to avoid the tariffs.
