#TrumpTariffs

Views on the Future

Likely Scenario:

Trump’s administration will continue using tariffs as a negotiating tool, following the “anchor effect” pattern—imposing high tariffs initially, then reducing them in deals, as seen with China. Expect more bilateral agreements, particularly with allies like the UK and Canada, to reduce tariffs selectively while maintaining a 10% baseline to encourage domestic production.

Risks:

Persistent uncertainty and retaliatory tariffs could deepen economic disruptions, with a potential recession if global trade contracts further. Supply chain issues, particularly for critical goods like medical devices, remain a concern.

Opportunities:

If negotiations succeed, tariffs could lead to fairer trade terms and increased domestic manufacturing in specific sectors. However, this requires complementary policies (e.g., industrial investment), which are currently absent.Long-Term

Outlook:

The tariffs may accelerate a shift away from global trade liberalization, forcing businesses to adapt to a fragmented economic order. The U.S. dollar’s reserve status could face challenges if trade wars erode confidence, though its dominance is likely to persist in the near term.