The Macro Fallout From 'Liberation Day'

2025-04-05 04:10:00 ET

Summary

• This week’s announced trade tariffs were much more severe than expected, heightening already germinating fears about lower growth and higher inflation - i.e. stagflation.
• We estimate the resulting hit to U.S. GDP growth at around 2.4%, with more considerable fallout if trade partners retaliate.
• Odds of a recession have risen, and markets will likely be challenged until the more growth-friendly element of the administration’s agenda comes into play.

By Christian Floro, CFA, CMT, Market Strategist

The size and scope of the tariff announcement overwhelm the trade actions implemented during the 2018 Trade War, bringing average U.S. tariff rates even higher than those seen during the Smoot–Hawley Tariff Act of 1930. As a result, heightened worries about economic disruption have erupted....

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