- Make no mistake, the global community will be very worried about the fast-paced changes that are happening with the Donald Trump administration taking office in the United States of America. Whatever the maverick and extremely unpredictable leader had promised during the campaign for the most powerful office in the world, Trump has set about introducing the same in a great hurry. In doing so, he has succeeded in creating great economic turbulence around the world. And he is not stopping at that. The reciprocal tariff is his pet topic now. Several countries at the firing line from Trump’s tariff threats and imposition are already experiencing tumultuous times. The cascading effect of these moves will resonate around the world in due course.
PC: NBC News
- The fixation of Trump with the tariff is grossly unfounded, defying economic prudence. Surprisingly, the quintessential businessman in the maverick leader should have come to the fore to comprehend the matter at hand and the counterproductive consequences of pushing ahead with the tariff war. Needless to mention, as politics and whims guide economics, a Trump-induced US recession looks likely. The moot point to ponder over is whether America is headed for a recession. What looked like a remote possibility at the start of March is now looking more and more probable. The investment bank Goldman Sachs has revised its outlook twice in the course of 25 days. Chances of a recession were initially revised from 15% to 20%.
PC: Financial Times
- Now, more substantially to 35%. The principal underlying concern both times has been Trump’s tariffs, which have already roiled stock markets and will affect everything from manufacturing to employment, inflation, and exchange rates as the year wears on. Early in March, Goldman said recession was not inevitable because Trump’s admin could always reverse course if things got too messy. But if the White House remained committed to its policies even in the face of much worse data, recession risk would rise further. Even now, its 35% forecast means recession is not a foregone conclusion. But Trump’s persistence on the tariff issue, despite warnings from all quarters, has become narrower.
PC: Seeking Alpha
- Further, he’s on course to announce reciprocal tariffs that will come into effect from 02nd April, hoping to erase America’s huge trade deficit. But the way most economists see it, tariffs will raise US prices, suppress demand and domestic spending, thereby reducing manufacturing and employment. Even if there’s no recession – defined as two consecutive quarters of shrinking real GDP – Goldman sees US GDP growth slumping to 1% this year and unemployment inching up to 4.5%. So, at least in the short term, tariffs could be a self-goal. And stagflation – low growth, high inflation – is not what Trump supporters bargained for when they voted for him last Nov. His approval ratings are gradually slipping. The world will further witness an intense tariff war.
