T-Day Is Coming. What Will Tariffs Do To The Economy? | Global News Avenue

The deadline for President Donald Trump’s comprehensive tariffs is approaching quickly, and if implemented, will have an unpredictable impact on the economy.

First, on March 4, the United States will impose a 25% tariff on products Canada and Mexico. Then, on March 12, the U.S. will begin charging 25% tariffs Imported steel and aluminum. On April 1, the Ministry of Commerce will Report to Trump Retaliation against reciprocity tariffs in order to retaliate against other countries that set trade barriers to U.S. products. On top of that, Trump set an April 2 date to announce 25% tariffs on cars, semiconductors and drugs.

Financial market participants scramble to speculate whether tariffs will take effect as planned, whether they will be delayed or watered, and to what extent it is just a negotiation strategy to win economic and political benefits in affected countries.

Tariffs on Mexico and Canada should come into effect in February. However, Trump delayed its implementation by a month after both countries announced that they were improving border security against drug smuggling and illegal immigration. Trump said on Monday that the delayed tariffs will be “executed on time and on time.”

Why worry about tariffs?

Forecasters expect significant impact on the U.S. economy, and their size will depend on tariff levels and the number of products affected.

Trump and his allies say the tariffs will encourage companies to produce products in the United States rather than overseas, help U.S. companies and even increase revenue enough to make the country no longer need an income tax or the IRS.

Mainstream economists have doubts about these claims. Many forecasts predict that tariffs will drive inflation by raising consumer prices while slowing growth, increasing the risk of a double blow to the economy, called “Stagnant. ”

An analysis by Morgan Stanley economists last week believes Trump’s new round of tariffs will first raise prices and make consumers buy less later this year and slow down significantly Economic growth.

The prospect is unclear

Morgan Stanley economists predict that the slowdown will be more important than price increases. This will lead to the Fed lowering interest rates in response, trying to stimulate the economy and prevent an economic downturn.

By contrast, Nomura economists predict that Trump’s trade policy will push core PCE inflation significantly more than 3% in the medium term, causing the Fed to delay lowering interest rates until 2026.

These forecasts and several others point out that it is uncertain, given that the exact tariffs will be imposed exactly, and how the target countries retaliate. Additionally, as economists have expected in recent years, the economy is not always a reaction to change.

For example, inflation surged after the pandemic, including forecasters at the Federal Reserve (Fed) because many believe that price increases will be “temporary” and rapidly diminish. Instead, this impact is flooding in global supply chains when Covid-19 interrupts the supply of critical components, including computer chips, which have become more complex than economists realize. Much, because Austan Goolsbee, president of the Federal Reserve Bank of Chicago, In a recent speech, it was pointed out.