Slowdown In Global Growth

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Slowdown In Global Growth

Us Tariffs Will Slowdown Global Growth

According to senior economists from Rabobank, the tariff plans of the US government will slow down global growth. They also discussed how the recent trade deals with Japan and AU are based on a fragile foundation.

The bank added that the trade deals highlight Trump's political victory. However, there are still a lot of details which must be sorted out.

Questions Over Investment Promises

The terms of the deals show that 15% tariffs will be added to the EU and Japanese goods. Also, both parties have agreed to increase their investments in the USA.

For those countries which fail to make a deal before the deadline, the US government is planning to impose 15 - 20% tariffs. It's worth noting that these will be put on top of the other targeted tariffs.

On the surface, it looks like a good deal for all the parties. However, a closer look reveals they are not favourable for the US allies. It appears that the other countries just wanted to prioritise stabilisation at this stage.

However, the tariffs will also have long-term risks for the USA. It would affect the country's reliability as a viable trade partner. At the same time, it will move the inflation higher as the USA imports a lot of goods/services.

Rabobank also highlighted that it's important to understand who will really be paying the tariffs. Will it be the producers or the consumers? Also, which country will be ultimately paying those tariffs?

Another question is the viability of the proposed investments in the USA. Also, it remains to be seen whether the production will move back to the USA or not.

Rabobank commented on how the turmoil over the trade issue is still not over. In fact, they believe that Trump is getting ready to prepare another round of demands.

Looking ahead, Rabobank added that the trade tariffs will lead to monetary policy divergence around the world. For starters, the BoJ is gearing up for a rate hike later in 2025. Meanwhile, the ECB is also highly likely to end its easing cycle.

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