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Tariffs

Trump's Tariffs and the Global Economy: Assessing the Impact

Strategic Insights

— 2 min read

The introduction of tariffs by US President Donald Trump in early April has had a significant impact on the global economy, with stock markets around the world experiencing considerable shocks. The IMF revised its economic growth forecasts downwards, citing rising international trade tensions and changes in financial markets. Global economic growth is now forecast to decline by 0.5% to 2.8% in 2025, with the US experiencing growth of only 1.8% (0.9% less than forecast in January).

Key Takeaways:

  • The US President's tariffs have led to a significant decline in global stock prices, with the global stock price index in euro terms falling by 4.1% in April.
  • The IMF's economic growth forecasts have been revised downwards, citing rising international trade tensions and changes in financial markets.
  • The European Central Bank (ECB) has cut monetary policy interest rates for the seventh time in a row, in response to the economic uncertainty caused by the tariffs.
  • The US dollar has fallen by 9% since the start of the year, as distrust of Trump's policies grows.
  • The price of gold has risen by 5% in April, as investors seek safe-haven assets in the face of economic uncertainty.
  • The S&P 500 stock index fell by 12% in the days following the announcement of Trump's tariffs, but recovered after the postponement of the tariffs, rising by 9.5% on April 9.
  • The share prices of the "Magnificent Seven" (large technology companies) also reached their lowest price levels in April, but rose towards the end of the month.
  • The technical limits for the S&P 500 stock index are visible, with the index price falling by 18.9% from its peak (short of the 20% threshold when a price correction is considered a "bear" market).
  • The index price has recovered from the low of April 8 and exceeded the level of March 13.

Statistics:

  • Global economic growth is forecast to decline by 0.5% to 2.8% in 2025 (IMF).
  • US economic growth will be only 1.8% in 2025 (IMF).
  • The S&P 500 stock index fell by 12% in the days following the announcement of Trump's tariffs.
  • The S&P 500 stock index fell by 18.9% from its peak (short of the 20% threshold when a price correction is considered a "bear" market).
  • The US dollar has fallen by 9% since the start of the year.
  • Gold prices have risen by 5% in April.

Sources:

  • Luminor Bank, AS (April 2023)
  • International Monetary Fund (IMF)
  • European Central Bank (ECB)

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