In the middle of a chain reaction

The aftershocks from President Trump's tariffs are being felt near and far.

- 

“The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they're fine.”

David Kelly, chief global strategist at JP Morgan Asset Management

Much has been written since President Trump’s ‘Liberation Day’ tariff announcements on April 2 kicked off a period of volatile markets and heightened business uncertainty globally. The wonderful quote from JP Morgan Asset Management's David Kelly above, beautifully summarises the various negative impacts of tariffs.

Typically, economists think of these effects as applying to the country imposing the tariff - in this case (initially) the US. But when the tariff impositions are as large and as widespread as those proposed, the economy imposing the tariffs is as large as the US, and other large economies retaliate, there is a significant amount of flow-on economic harm caused to other countries.

US feeling the pain

Yale University’s The Budget Lab has done some great work on the impact of tariffs on the US economy. Their latest estimates find that the tariffs in place on June 1, 2025, will shrink US GDP by 0.5%, raise unemployment by 0.3% and increase prices by 1.5%, resulting in the average US household being $2500 worse off in 2025. Larger impacts were estimated before tariffs were paused or rolled back.