MACRO PICTURE
The Impact of the “Liberation” Day Tariffs on the US and Global Economy and Markets
Rising Short Run Risk of a Recession But Over the Medium Term “Tech Trumps Tariffs”
By Nouriel Roubini
4 April 2025
In this paper we discuss:
- The announced April 2nd tariffs were much worse than most analysts and markets expected.
- Negotiations will start - hopefully soon - to negotiate down such high tariffs.
- If implemented as they are, these tariffs would reduce US growth and increase US inflation.
- But the net economic impacts also depend on the policy responses.
- Of course, on impact the tariff announcement is risk off and leading to much lower US bond yields and lower US equities; but over time the impact of tariffs will lead to higher bond yield as inflation rises.
- But so far market discipline has not worked in constraining Trump as equity prices are in correction or even bear market
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