🔹 Donald Trump has announced new import tariffs that could raise U.S. trade duties to their highest level in over a century, and economists are sounding the alarm. They warn that these measures risk triggering a recession, increasing inflation, and significantly raising costs for American households.
Historic Tariff Hike: Highest Since 1910
Trump’s proposed policy introduces a 10% base tariff on all imports into the U.S., along with additional double-digit rates targeting key trade partners. The result? The average U.S. import tariff would jump to 22%, up from just 2.5% last year.
🔹 Olu Sonola of Fitch Ratings called the move a “game changer”, saying it could reshape not only the U.S. economy but global markets as well.
🔹 Simon French of Panmure Liberum added:
“The odds of a U.S. recession within the next 12 months have significantly increased due to last night’s decision.”
Markets React: Dollar Drops, Consumer Confidence Shakes
Financial markets reacted immediately. The U.S. dollar dropped by 1.7% against a basket of major global currencies, reflecting growing concern about the country's economic outlook.
Consumer confidence also took a hit:
🔹 The Conference Board’s consumer confidence index fell by 7.2 points to 92.9 in March, its lowest level since January 2021, when the country was still emerging from the pandemic.
🔹 Even more troubling, the expectations index, which reflects public outlook on income, job conditions, and business prospects, plunged to 65.2 — the lowest in 12 years, and well below the 80-point threshold that signals recession risk.
Prices Will Rise, Inflation May Surge, Households to Bear the Burden
The tariffs are expected to impact American households across the board.
🔹 James Knightley of ING estimates that the average American could face up to $1,350 in additional costs annually, depending on how much of the price increase is passed on by businesses.
🔹 During Trump’s 2018 tariff wave, it was shown that about 60% of a 20% duty on imported washing machines was ultimately paid by consumers — and this time, the scope is even broader.
Unemployment May Rise, GDP Could Shrink
🔹 Marc Giannoni of Barclays predicts that core inflation will likely exceed 4% this year, while real GDP is expected to contract. He also warns of rising unemployment.
🔹 His forecast shows unemployment hitting 4.6% by Q4 2025, marking a shift that aligns with a recession scenario.
Markets Are Pricing in a Downturn
🔹 Paul Donovan of UBS emphasized that markets are already adjusting to the possibility of a recession.
He stated:
“If there’s no retreat, markets will price in a U.S. recession. If there is a retreat, markets will assume U.S. growth will weaken regardless.”
Summary: Risky Economic Gamble With Global Consequences
Trump’s new trade agenda — branded as a “Liberation Day” — could have serious consequences for ordinary Americans and the global economy. Rising inflation, a falling dollar, crumbling consumer confidence, and the threat of pushing the U.S. back into recession all suggest this move is seen as a high-risk economic experiment.
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