Trump tariffs set to reshape global economic outlook

Investing.com — Donald Trump’s return to the U.S. presidency is poised to impact global markets, as analysts predict swift action on tariffs in early 2025. A 60% tariff on Chinese imports and 10-20% levies on other trade partners are likely, adding inflationary pressure and slowing investment.

Analysts forecast U.S. GDP growth to ease to 2.2% in 2025, down from 2.8% this year. With the Federal Reserve curbing rate cuts after March, leaving the upper bound at 4.25% by year-end. Strong economic fundamentals, bolstered by resilient private sector balance sheets and accommodative financial conditions, are expected to soften the tariff impact.

In contrast, Europe faces stagnation. The ECB is projected to prioritize growth over inflation, with five rate cuts anticipated, taking the deposit rate to 1.75%. The Eurozone’s economic gap with the U.S. is expected to widen.

China’s growth is forecast to decelerate to 4.0%, even with anticipated fiscal stimulus. Trump’s tariffs could intensify headwinds, challenging Beijing’s efforts to stabilize its economy.

Asia will experience mixed fortunes. Japan, Taiwan, Malaysia, and the Philippines are expected to outperform, while India, South Korea, and Thailand face underperformance amid disinflationary trends.

The report highlights uncertainties from Trump’s deregulation and trade policies, adding volatility to global supply chains and investment strategies. Analysts recommend USD long positions and selective rate plays, emphasizing the fragmented global outlook ahead.