Trump's Tariffs Set to Reshape the Global Economic Landscape

Investing.com -- Donald Trump's expected return to the U.S. presidency is anticipated to impact global markets. Analysts foresee a swift action on tariffs by early 2025, predicting a potential imposition of 60% tariffs on Chinese imports and 10-20% on other trading partners. This is likely to increase inflationary pressures and slow down investments.

Analysts predict that the U.S. GDP growth will decline from 2.8% this year to 2.2% in 2025. The Federal Reserve is expected to limit interest rate cuts after March and maintain a ceiling of 4.25% until the end of the year. With strong economic fundamentals, resilient private sector balance sheets, and aligned financial conditions, the impact of tariffs is expected to be softened.

In contrast, Europe is facing a recession. The ECB is expected to prioritize growth over inflation and implement five rate cuts that will reduce the deposit rate to 1.75%. The economic gap between the Eurozone and the U.S. is projected to widen.

China's growth is forecasted to slow to 4.0% despite expected fiscal stimulus. Trump's tariffs could exacerbate headwinds and challenge Beijing's efforts to stabilize its economy.

Asia is expected to present a mixed picture. Japan, Taiwan, Malaysia, and the Philippines are expected to perform better, while India, South Korea, and Thailand are likely to underperform due to disinflationary trends.

The report highlights the uncertainties stemming from Trump's deregulation and trade policies, indicating that they could create volatility in global supply chains and investment strategies. Analysts recommend long positions in USD and selective interest plays, emphasizing the fragmented global outlook.