Bein' Honest About Trump's Tariffs: A Breakdown of Their Devastating Effects
Economic downturn risks spike worldwide due to fallout from U.S. tariffs, according to a survey
Let's face it, the global economy's on the ropes, thanks to ol' Donny's trade tactics. In a recent poll, most economists reckon we're primed for a recession this year due to the president's tariffs.
That's a big ol' swerve from just three months ago, when these same economists thought the world economy would march along at a robust pace. But Donald's got a really big hammer and likes to swing it around.
He's been trying to whip up a new world trade order, slapping tariffs on nearly every imported good. And boy, has that sent shockwaves rippling through financial markets! These tariffs have wiped trillions off stock markets and left investors squirming like a caught fish, unsure if Uncle Sam's assets are still a safe bet.
Even a temporary pause on the heaviest tariffs doesn't change the fact that a 10% blanket duty on all U.S. imports remains, along with a whopping 145% tariff on China, America's biggest trading partner.
Economists are scratching their heads, wondering how firms can make plans when they've no idea what tariffs might be lurking around the corner. As James Rossiter, head of global macro strategy at TD Securities, puts it, "When you don't know what the reciprocal tariffs are, it's hard enough for firms to think about July. Try and plan another year down the road? Forget it."
It's no surprise, then, that global businesses are either abandoning ship or drastically trimming their revenue forecasts. They can't stomach all this uncertainty and the eye-watering tariffs, so they're tightening their belts.
It's worth noting that not a single economist polled said tariffs have had a positive impact on business sentiment. Negative votes soared to 92%, with the remaining 8% hailing mostly from India and other emerging economies. Only these guys seem sanguine about Trump's tariffs, which speaks volumes.
Three-quarters of these economists scaled back their 2025 global growth forecast, bringing the median down to 2.7% from 3.0% in January. The International Monetary Fund's number was just a tad higher, at 2.8%.
Individual economies painter a similar picture. The consensus view was cut for 28 of the 48 economies surveyed, and only 10—Argentina and Spain among them—saw a slight upgrade.
Overall, it looks like the downturn in growth expectations that began when Trump started imposing tariffs is deep and won't be easy to climb out of. When asked about the risk of a global recession this year, a whopping 60% said it was high or very high. A mere 8% said low.
"It's a very difficult environment to be optimistic about growth," said Timothy Graf, head of macro strategy for Europe, Middle East, and Africa at State Street. The damage, he explains, runs deeper than just the tariffs themselves, possibly scuppering America's reputation as a reliable partner in international agreements, like trade and defense.
As if that wasn't enough, the progress central banks have made in reining in inflation by raising interest rates may come to a halt thanks to Trump's tariffs. Most economists classify tariffs as inflationary, and with America's largest trading partner suitably bottlenecked, we could be edging closer to a dreaded scenario known as stagflation—an extended period of no or low growth, high inflation, and rising unemployment.
In a nuthell, the majority of economists warn that Trump's tariffs have created a storm of uncertainty, disrupted supply chains, battered stock markets, pushed the global economy towards recession, and have the potential to cause stagflation.
- The global economy, once projected to march at a robust pace, is now primed for a recession this year due to President Trump's tariffs, according to most economists.
- Financial markets have been sent into shockwaves by the tariffs, with trillions being wiped off stock markets and investors left unsure about the safety of Uncle Sam's assets.
- A 10% blanket duty on all U.S. imports remains, along with a staggering 145% tariff on China, America's biggest trading partner.
- The uncertainty caused by these tariffs has led global businesses to either abandon ship or drastically trim their revenue forecasts.
- Not a single economist polled said tariffs have had a positive impact on business sentiment, with more than 90% noting negative effects.
- The consensus view was cut for 28 of the 48 economies surveyed, and only 10—Argentina and Spain among them—saw a slight upgrade.
- The majority of economists warn that Trump's tariffs have the potential to cause stagflation—an extended period of no or low growth, high inflation, and rising unemployment.
