US President Donald Trump’s reciprocal tariffs could wipe out economic activity worth $1.4 trillion across the world and raise prices and damage GDP in the United States substantially, according to an analysis.
Trump is set to start the roll out of reciprocal tariffs on Wednesday (April 2). He has pitched it as the ‘Liberation Day’, but there is fear and fatigue as nearly all economic indicators are grim: the stock markets are down, the consumer sentiment is at a four-year low, and economists have warned of a realistic risk of recession.
An analysis by England’s Aston Business School has found that a full-scale trade war trigerred by Trump’s tariffs could cost the world $1.4 trillion in lost economic activity, raise prices in the United States by 5.5 per cent, and reduce the US economy by 1.3 per cent.
At least in the short run, tariffs are certain to prices in the United States. In the medium to long run, the inflation is expected to turn into a recession or stagflation as consumer consumption, industrial production, and business investment would fall as a result of higher prices and job losses.
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