Economics for Investment Q2 - Tariffs threaten recession

Our flagship publication, Economics for Investment is just released to clients. Amidst the market turmoil it uses our SOLVER model to assess the economic outlook and draw out investment implications.

Trump's huge tariffs threaten to tip the US and other economies into recession. We certainly expect an economic slowdown as the tariffs themselves are a large tax on US consumers. But the upending of business models and the uncertainty created by chaotic policy-making threaten to turn the slowdown into a recession, which we give a 50% probability. Tariffs will raise US inflation temporarily but we anticipate that the slowdown or recession will bring it back to the 2% target in 2026-27. Inflation in the euro zone and UK will also be brought down by weaker growth, especially since they look set to apply limited or no new tariffs. The overall deflationary effects of tariffs therefore points to lower interest rates over time. China's aggressive retaliatory stance will further hit domestic confidence already low. For a complimentary copy of the report please email info@Tricio-advisors.com