The U.S. Economy's Trajectory Amid Higher Tariffs

2025-04-10 03:35:00 ET

Summary

• President Donald Trump has consistently emphasized the trade deficit as a measure of unfair practices by other countries that disadvantage the U.S.
• If the tariff plan moves forward as initially announced, the near-term outcome will likely be stagflationary domestically and contractionary globally.
• Despite the recent volatility and repricing in U.S. Treasury and other fixed income markets, there is still a strong case to diversify away from highly priced U.S. equities into a broader mix of global, high quality bonds that offer attractive starting yields and a more favorable risk-adjusted profile.

On 2 April, the Trump administration announced sweeping tariffs that were more aggressive than many had expected. Then on 9 April, the administration announced a 90-day pause on most of the new country-specific “reciprocal tariffs.” However, tit-for-tat retaliation has further escalated tariffs on U.S. imports from China, and vice versa....

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