Donald Trump’s “liberation day” tariffs present a severe risk to a US economy that is already rapidly losing momentum, with economists warning of surging prices for households and a growing risk of recession in the wake of the president’s announcements.
The combination of a baseline duty of 10 per cent with double-digit top-up tariffs on major partners including China and the EU would drive up prices for a vast array of imports, damage business investment and deepen the risk of a period of high inflation and weak growth, said analysts.
Olu Sonola, head of US economic research at Fitch Ratings, said the US tariff rate on all imports would be 22 per cent, compared with 2.5 per cent last year, putting it at the highest level since 1910. This is a “game changer” for the US economy and the world at large, he said. Analysts at Barclays forecast US output would fall in the fourth quarter of this year.