THE latest round of U.S. trade tariffs unveiled on Wednesday will sap yet more vigour from a world economy barely recovered from the post-pandemic inflation surge, weighed down by record debt and unnerved by geopolitical strife.
Reuters reported today, depending on how U.S. President Donald Trump and leaders of other nations proceed now, it may also go down as a turning point for a globalised system which until now had taken for granted the strength and reliability of America, its largest component.
"Trump's tariffs carry the risk of destroying the global free trade order the United States itself has spear-headed since the Second World War," said Takahide Kiuchi, chief economist at Nomura Research Institute.
But in coming months it will be the plain and simple price-hiking - and therefore demand-dampening - effects of new levies applied to thousands of goods bought and sold by consumers and businesses across the planet that will prevail.
"I see it as a drift of the U.S. and global economy towards worse performance, more uncertainty and possibly heading towards something we could call a global recession," said Antonio Fatas, macroeconomist at the INSEAD business school in France.
"We are moving into a world which is worse for everyone because it is more inefficient," said Fatas, who has acted as a consultant for the International Monetary Fund and World Bank.
Speaking in the White House Rose Garden, Trump said he would impose a 10% baseline tariff on all imports and held up a chart showing higher duties on some of the country's biggest trading partners, including 34% on China and 20% on the European Union.
A 25% auto and auto parts tariff was confirmed earlier.
Trump said the tariffs would return strategically vital manufacturing capabilities to the United States.
Under the new global levies imposed by Trump, the U.S. tariff rate on all imports jumped to 22% - a rate last seen around 1910 - from just 2.5% in 2024, said Olu Sonola, head of U.S. economic research at Fitch Ratings.
"This is a game changer, not only for the U.S. economy but for the global economy," Sonola said. "Many countries will likely end up in a recession."
IMF Managing Director Kristalina Georgieva told a Reuters event this week she did not see global recession for now. She added the Fund expected shortly to make a small downward "correction" to its 2025 forecast of 3.3% global growth.
But the impact on national economies is set to diverge widely, given the spectrum of tariffs ranging from 10% for Britain to 49% to Cambodia.
If the result is a wider trade war, that would have even larger repercussions for producers like China, which would be left hunting for new markets in the face of wilting consumer demand across the globe.
And if the tariffs push the U.S. itself towards recession, that will weigh heavily on developing countries whose fortunes are closely tied to those of the world's largest economy. - April 3, 2025
