What could enlarge the impact of duties
The new duties announced by Donald Trump have triggered the markets as it is concerned that the trade war declared by the US president will lead the world economy to recess.
“We are still in the process of evaluating the macroeconomic impacts of the tariff measures announced, but apparently they have a significant risk for the prospect of the global economy in a period of sluggish growth,” the Director General of the International Monetary Fund warned.
But how likely is the global economy to slip into recession? JPMorgan has a pessimistic answer, considering that the chances have increased significantly after Trump’s latest announcements to impose duties in 185 countries. In a note entitled “It will spill blood”, the US house said the chances of the recession of the global economy reach 60% from 40% previously.
“US subversive policies are recognized as the greatest danger to world prospects all year,” JPMorgan said in a note. “The latest news is boosting our fears as US trade policy has become decisively less business -friendly than we expected.”
JPMORGAN economists say duties mean “at a basic level” a functional tax increase in the markets of imported goods from households and businesses in the US.
Analysts at the US House found that this week’s announcement increases the average US tax rate “by about 22% to about 24%”, equivalent to about 2.4% of the total value of all goods and services produced in the country or GDP.
“The increase in this size is equivalent to the highest increase in taxes from World War II,” JPMorgan’s note typically said. Its results could even have a greater impact “through retaliation, sloping the US climate in the US and supply chain disorders”.
“We emphasize that these policies, if maintained, will probably push the US and possibly the global economy into recession this year,” the house analysts warn, noting that the recession “is not the predetermined result”.
“Beyond obvious that these policy actions may change in the coming weeks, we continue to emphasize that American and global expansion stand on solid ground and should be able to withstand a medium -sized shock.”
For the time being, however, JPMorgan’s economists “are seeing the full implementation of announced policies as an essential macroeconomic shock”, a situation from which Trump’s policies insist.
Trump’s duties
It is recalled that the US president announced 10% duties on products imported to the United States and even additional, higher duties for 60 commercial partners with a persistent trade deficit with the US.
The duties announced affect a large number of countries from China and Japan to the European Union and areas near Antarctica only inhabited by penguins. They also come to add to the existing duties that have been imposed on the United States, Canada and Mexico’s top commercial partners.
Source: naftemproriki.gr