Trump's Tariff Plan Set to Shake Global Trade - Recession Risks Loom
New Delhi (The Uttam Hindu): US President Donald Trump is gearing up to announce sweeping reciprocal tariffs on Wednesday a bold move aimed at addressing trade imbalances that has sparked fears of economic fallout worldwide.
The announcement set for 4 pm Eastern Time (ET) on April 2 (1:30 am IST on April 3) will take place at a Rose Garden event attended by Trump’s Cabinet. The President is expected to detail the tariffs, emphasizing their role in reducing US dependence on foreign goods. Trump made it clear that all countries would be affected dismissing any notion of a more targeted approach.
In a pre-announcement statement, Trump declared April 2 as ‘Liberation Day’ and confidently predicted that nations like India would dramatically reduce their tariffs. He claimed that countries have been unfairly taxing US goods for years, with the White House pointing out that India’s tariff on US agricultural products reaches 100%.
The Growing Economic Concerns
Global financial institutions are raising alarms about the potential consequences of Trump’s escalating trade war. A report from Goldman Sachs warns that the risk of a US recession is rising, with the firm increasing the probability of an economic downturn within the next year from 20% to 35%. The revised outlook comes as Goldman Sachs adjusts its economic indicators, raising inflation projections and cutting the 2025 GDP growth forecast to just 1%. Unemployment rates are also expected to climb.
S&P Global also weighed in, pointing out that tariffs are contributing to a slowdown in US GDP growth, with projections for the economy being revised downwards. The firm highlighted risks of prolonged US policy uncertainty, which could weaken demand and dampen growth prospects.
CNBC Survey Signals Post-Pandemic Slowdown
A CNBC survey of 14 economists revealed that the US economy is facing its slowest growth since the pandemic recovery, with a projected first-quarter GDP growth of just 0.3%, down from 2.3% in the fourth quarter of 2024. The economists pointed to policy uncertainty and the Trump administration’s tariffs as key factors contributing to a stagflationary outlook for the US economy.
Global Retaliation and Rising Tensions
In response to the tariffs, several countries have signaled they will retaliate. European Commission chief Ursula von der Leyen made it clear that while the EU prefers a negotiated resolution, all options including retaliatory tariffs, are on the table. Meanwhile, China, Japan and South Korea have formed a united front to coordinate their response to the US tariffs.
As the trade war intensifies, the global economy is bracing for significant repercussions with countries and analysts alike keeping a close eye on how the situation will unfold. The ongoing uncertainty could further exacerbate the slowdown in global growth, leaving nations to navigate a rocky economic landscape.
