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Economists, market observers and consumers are still trying to understand the consequences of President Donald Trump’s proclamation on Wednesday sweep new tariffs.
The plan, part of the “Make America Again” initiatives, has a 10% basic tariff for all US trading partners, and up to 50% of the countries with which the US has a trade deficit. For example, imports from China, South Korea and Japan, such as 34%, 25% and 24%, respectively. Products from the European Union will be delivered with a 20% collection.
Investors’ reaction was fast. S&P 500 – Proxy for a wide US stock market – ended on the session on Thursday decreased by 4.8% and is now more than 12% below its February maximum.
The main concern of market observers: economic shocks. When other countries respond to Trump’s hiking, enhancing their own duties, an escalated conflict can grow into a trade war that, as economists say, say can slow down global economic growth.
And since tariffs are going from imported companies, economic experts say that US firms that use foreign goods are likely to take at least some customer tariff costs-this is a step that can review inflation.
That’s what economists and market experts say.
Expect inflation but not necessarily recession
If the tariffs remain at the recently announced levels, the average rate on all US imports will increase to 18.8%, which is compared to 2.5% in 2024 According to the tax fund estimates.
But just because the American business faces higher import costs does not mean that they will hand over to consumers commensurate.
Consumers are unlikely to feel the whole main on Recently told CNBC to do it.
“In weakening the economy In general, consumers will be very sensitive to the price change, ”he said.
However, expect some prices to rise – at least in the near future.
“Higher tariffs will probably lead to 3% to 5% more inflation over the next year and one and a half than in the US without them,” says Bill Adams, Chief Economist Comerica Bank. With inflation Currently sitting on 2.8% compared to last yearThis may mean that this year (up to 4.8%) by 2 percentage points (up to 4.8%), after which next year, next year, he says.
And although heating inflation can emphasize the economy, Adams and other economists believe that there is still a place for growth, even with some wind.
“The recession over the next 12 months looks more likely to be considered at the beginning of the year, but we still believe that the economy is likely to expand in 2025, and in particular 2026, since the administration seems to use tax revenues from tariffs to partially fund the broad reductions that will come into force next year.”
Wait for a short -term market trick
Old Trusism Wall -Story says markets hate nothing more than uncertainty. And despite the fact that investors have received their response to what tariffs will set the administration, there are big questions about how these tariffs can develop over time, including possible higher tariffs from other countries.
While the dust is settled, “the markets will be peculiar,” says Scott Helfstein, head of the Global X. Investment Strategy Department, perhaps slightly below, slightly higher, but largely the side when we absorb news from yesterday. “
Among the questions that investors will still look for answers: will the tariffs remain at the current level? Some experts on the market don’t think so.
“We might expect tariffs to be reduced from the levels announced by the president,” Mark Hefele wrote in a recent note, Chief Investment CEO in UBS Global Wealth Management. “The president himself invited the negotiations, and the Finance Minister (Scott) said in an interview with Bloomberg that tariffs were announced -” the high end of the number “and that the countries could take tariffs.”
However, do not expect that they are significantly shrinking. Asked if Trump could cancel the course, or perhaps it was negotiation tactic, US Secretary Secretary Howard Lutnita was firm in refusal. “I don’t think there’s a chance” he said in an interview with CNN. “This is a restructuring of global trade, what happens.”
Some trading partners may not accept kindly to this tactic, and some have already responded to their tariff measures. China and EU, eg, there are already announced plans for economic opposition.
Overall, however, the economy went to the tariff statement, demonstrated Market Elastic Labor Market and encouragement Corporate incomeGelstein says.
Even if all shaky in the short term, the topics that are expected to lead to growth in the market in the long run – for example, profits in AI and automation – remain intact, he adds. Investors may have to just wait for companies to understand the tariffs’ business strategies.
“These trends will continue – it may be on a slightly different way.”
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