Tariff Tantrum: Donald Trump's trade moves could push USA into recession, cautions investment giant

Donald Trump’s plan to bring back major tariffs has made the chances of a U.S. recession the highest in years, claimed Dan Ivascyn, chief investment officer at Pimco. Ivascyn has warned that many investors don’t fully realize how serious the US President is about these trade moves or how much they could hurt the economy.

Ivascyn expressed concerns stating that investors don’t fully understand how determined Trump is to bring back tariffs. Even though there was a 90-day pause, Trump is still serious about his “Liberation Day” tariff plan and hasn’t shown any sign of stopping.

Ivascyn claimed investors were still hoping things will go back to how they were before “Liberation Day,” but he doesn’t believe that will happen. He says it’s unlikely that trade will return to normal, and there’s a lot of uncertainty ahead.

What will be Impact on Tariff Rates?

Ivascyn said that even though tariffs might be lower in the future, Trump’s actions will likely lead to a situation where prices stay high and the economy slows down at the same time.

The Federal Reserve in response pronounced to keep interest rates at 4.3 per cent, although Trump kept asking Fed to lower borrowing costs. The Fed explained that Trump’s tariffs are creating uncertainty, which could lead to increase in unemployment and higher prices.

How is Pimco Adjusting Its Investments?

Pimco is being cautious with its investments because of the present economic circumstances. They are concentrating on safer, low-risk options like mortgages and government bonds in other countries, and avoiding areas that are more likely to be affected by an economic downturn.

Ivascyn said that the U.S. probably won’t lose its status as the world’s main currency, but it’s also unlikely to reduce its national debt much. Because of the uncertainty in the U.S., Pimco has recommended investing in safer, high-quality markets outside the country. Ivascyn’s overall view of the economy is careful, warning that there’s a risk of high inflation and slower economic growth at the same time.

FAQs

Q1. Which country has received the highest percentage of US Tariffs?
A1. China has been levied with the highest percentage of Donald Trump tariffs.

Q2. When did USA President Donald Trump's inauguration take place?
A2. USA President Donald Trump's inauguration took place on January 20.