Trump delivers trade shock

key takeaways.

• US tariffs will raise import duties to levels not seen in decades, raising inflation and recession risks for the US, and global economies
• While the US President’s announcements did not mention room for negotiation, we expect efforts to mitigate effective rates 
• The Federal Reserve has additional economic risks to manage, and its interest rate could fall as low as 2% if the US falls into recession
• We expect a period of risk-aversion in financial markets. US Treasury Inflation Protected Securities (TIPS), the Swiss franc, Japanese yen and gold should offer opportunities. 

President Donald Trump announced trade tariffs higher than markets anticipated. New import duties bring the US’s effective tariff rate to levels not seen in decades, and raise the risk of a US recession. Risk assets, including equities, are likely to see further declines while select fixed income, the Swiss franc, Japanese yen, and gold should outperform...

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