#TariffsPause

Even before that development, our macro team had been steadily reducing their expectations for growth in the United States. The economy is clearly late cycle, and won’t expand at a constant rate of 3 per cent forever. And the threat of even minimal tariffs, as the administration has long telegraphed, promised to be inflationary. Therefore, the odds of a stagflationary outcome were already rising before 3 April. 

That day’s initial tariff announcements were significantly steeper and broader than the market was expecting. And the market reaction was clear. Now we have a pause in those tariffs - and for now it is only a pause.