Trump tariffs can lead to global economic recession

Experts predict inflation, growth and job loss, with negative impacts also for the United States.

The tariffs imposed by US President Donald Trump will be able to trigger economic recession in several countries, according to the Fitch Ratings risk classification agency. Experts predict inflation accompanied by growth and global jobs, with different impacts for each region and negative effects also for the US economy.

The impact of Trump’s trade war provided by observers includes a drop between 0.4% and 0.8% on global growth, the increase in a percentage point in world inflation and the loss of 300,000 jobs in rich countries.

“This is a watershed, not only for the US economy but for the global economy,” says Olu Sonola, head of economic research for the United States of Fitch Ratings. “You can throw away most predictions if this tariff remains active for a long time.”

Impacts for Latin America

A recession and inflation scenario in the US could increase unemployment and reduce shipments to Latin America, affecting the region’s economies.

Latin America is a relevant importer of American products, having reached $ 486 million by 2023, according to the Economic Commission for Latin America and the Caribbean (ECLAC). Increased inflation in the USA tends, therefore, to make the prices of products that arrive in the region as well.

In turn, US consumers will be able to increase the price of bananas, imported in large quantities by the US of Guatemala, Ecuador and Costa Rica, as well as coffee, exported by Brazil and Colombia.

Coffee exported by Brazil should be more expensive on the shelves of American supermarkets | Douglas Magno/AFP/Getty Images

All of these countries will be subject from Saturday (05/04) to the 10%tariff, the base line applied by the US government to all its business partners. Other countries inside and outside Latin America, however, face higher percentages, such as Guyana (38%), Venezuela (15%), China (34%) and European Union (20%).

On the other hand, Colombian President Gustavo Petro said the region could benefit from tariffs. “Agroindustrial and semi-industrial products from countries outside Latin America are becoming more expensive in US markets, and if we can produce these cheaper products, it’s time to export them there,” he wrote at X.

Brazil begins to mobilize an arsenal of measurements, with the Planalto Palace and Congress already working on response guidelines.

Markets dispute in China and EU

The Chinese economy was faced with a hard blow, as the new tariff adds to previous 20%, reaching 54%. China goes through a moment of falling domestic consumption, forced to look for new markets to drain its production.

Experts predict commercial disputes with US local companies, which could lead governments to implement restrictions or carry out anti -dumping investigations.

In the case of the European Union (EU), inflation is expected to increase by up to four tenths of percentage point, due to the combination of new tariffs and taxes on steel, aluminum and cars.

However, companies in Europe will be forced to reduce the prices of products they cannot export, which would contribute to a drop in prices. In addition, other countries will try to increase their exports to Europe, which will create even more competition and lower prices in the eurozone.

Problems for the USA

The impact of US tariffs tends to be limited as imports and product exports occupy a secondary place in the economy compared to services.

However, imports from appliances, clothing and electronics at affordable prices have helped increase growth in recent years to levels above other developed economies.

Economists warn of increasing prices from a wide range of products, from t -shirts to wine or cell phones. According to Fitch Ratings, the highest prices will press real wages, weighing on consumer spending, while lower profits and political uncertainty will act as a barrier to business investment.

“It is likely that US growth in 2025 will be slower than the 1.7% we had projected in March, due to the higher rates than expected,” says an analysis of the Fitch. “We hope the effects probably exceed the benefits that US companies can achieve by increasing protection against foreign competition.”

Some large companies already announce adjustments, such as the automaker Stellantis, who said she would temporarily fired US workers and would close factories in Canada and Mexico. General Motors said it would increase production on American soil.

Retaliation

China and the European Union said they will retaliate the fares imposed by Trump. France President Emmanuel Macron asked European neighbors to suspend investments in the US.

Beijing announced on Friday the imposition of additional 34% tariffs on imports from the United States and also decided to restrict US exports of rare land, materials essential for the production of high-tech products such as semiconductors and electric vehicle batteries.

Other business partners, including South Korea, Mexico and India, decided to abstain as they seek concessions. Both American allies and rivals warned of a devastating blow to global trade.

Tariffs “clearly pose a significant risk to the global perspective in a moment of slow growth,” said Kristalina Georgieva, director of the International Monetary Fund (IMF) in a statement.

“It is important to avoid measures that may further damage the world economy. We appeal to the US and its business partners to work constructively to solve commercial tensions and reduce uncertainty,” added Georgieva.

Originally published by DW on 04/04/2025