UBS: Will Trump Tariffs Slow Global Growth to 2.9%?

TradingKey - UBS expects tariffs to be the biggest risk to the global economy and Wells Fargo sees little impact on the Fed's monetary policy decisions. 

Tariffs are the biggest risk to the global economic outlook, said Arend Kapteyn, chief economist at UBS.

UBS forecasts global growth will slow down from 3.2% in 2024 to 2.9% this year. If Trump continues to pursue the tariff policies he campaigned on, the USA trade restrictions could return to levels haven’t seen since the mid-1930s”.

“There could be a lot of additional downside risks if the tariffs are imposed.” He added. However, Kapteyn is skeptical that global tariffs will ever be implemented, as it is tricky on a legal level.

Previously, Trump considered a national economic emergency declaration to allow for a new tariff program.

However, regarding the impact on the outlook for U.S. interest rates, Wells Fargo believes that the Fed may not be overly concerned about inflation triggered by Trump's tariffs.