On November 17, 2024, I wrote an article entitled “Impact of the American Elections on the Global Economy” in which, among other reflections, I stated:
“Import tariffs, including a universal 10% tariff on imports from all foreign countries and a 60% tariff on imports from China, are one of the main pillars of Trump’s policies and will likely have the greatest global impact.”
“These tariffs hinder global trade, reduce growth for exporters, and strain public finances in all parties involved. They are likely to increase inflation in the United States, forcing the Fed to act with a tighter monetary policy.”
“This same rise in inflation will spread to other markets.”
We will soon witness the real impact of these measures in practice in April 2025.
Since April 2nd, when Trump announced tariffs ranging from 10% to 50% on imported products from more than 180 countries, stock markets have experienced historic declines.
Investors fear that the tariffs will make imported goods more expensive, driving inflation and reducing consumer spending, which could slow down the world’s largest economy — and possibly trigger a global recession.
In this context, “the uncertainty surrounding future trade relations and their impact on the economy is pushing investors away from risk assets and toward protective mechanisms.”
What Trump did not foresee was retaliation from markets such as the European and Chinese, with even higher tariffs — sometimes even double — on American imports.
No economy can remain healthy and sustainable while being closed off. Therefore, either markets will adapt to this new reality with lower profit margins, or these measures will be rolled back.
One thing is certain: one of these paths must be taken, or the global economy will face a crisis even more severe than during the pandemic.
* University Lecturer
Financial Consultant
17/04/2025
