Trump tariffs can climb to the highest level since 1872 – before relieved as a retaliation and climbing cycle
- President Donald Trump’s tariffs According to UBS analysts, it can reach an effective rate from 25% to 30% under its recently announced plans. A perpendicular ratio will mark the highest level for more than 150 years. However, after a retaliation and climbing cycle, the UBS sees that the tariffs have returned later this year.
President Donald Trump’s “Day of Independence” tariffs already send rates to the most upright levels in a century, but they can rise further.
According to A Note from UBS analysts On Friday, the latest import taxes Salvo will rise from 2.5% to 25% before the 2024 elections. But it’s not likely to stand there.
“We believe that the EU and China can retaliate and the ‘mutual’ approach to the US tariffs means that retaliation can be met by trade partners with even higher US tariffs.”
In addition, he said that some imports that did not target last week could be subjected to future investigations and lose their exemptions, and the UBS said that the Trump administration was “highly convicted” on the basis of restrictive trade policies of the Trump administration.
On Wednesday, Trump added a 34% tax to China, which will increase to 54% and reach the European Union with 20%. China has already retaliated with its own 34% tariff and said the EU is planning to respond.
UBS expects to peak in the US tariff rate in 25% of the tariff rate. According to data Fitch ratingsSince 1909, 25% effective tariff rate will already be the highest.
And if it reached 30%, it would be the highest since 1872 – the civil war hero Ulysses S. Grant president and the US economy were still in the Industrial Revolution.
However, in the third quarter, UBS sees that tariffs are starting to return and the effective ratio expects 2025 to finish by 10-15%.
“Various individual countries argued that they do not want to retaliate and agreements with individual countries may begin to reduce the overall effective tariff rate.” He said.
In fact, Vietnam confirmed that he offered to remove all tariffs in the US imports at the weekend, and Trump management officials said in a statement on Sunday that more than 50 countries reached the White House for tariff negotiations.
Trump will also encounter more pressure to negotiate, and UBS will indicate a comprehensive business lobbying for irrigation or exceptions to irrigate possible difficulties and policies on legal basis for tariffs.
And as the midterm exam season approaches, political calculations can soften Trump’s attitude. Republican Sen Ted Cruz warned a political “blood bath” in 2026 if the tariffs cause stagnation.
UBS sees that the US GDP expands less than 1% in 2025, including one -year stagnation that will see GDP’s 1% drop from the summit. Stocks will be recovered, but analysts have reduced the year -end S&P 500 targets from 6,400 to 5,800.
“We believe that some ‘ramp’, which can be accepted as a potentially acceptable that can enable all parties to declare victory, a combination of higher European defense expenditures, the fall of excessive supply to global markets, reduction in existing tariffs or tariff barriers or measures to increase internal investment in the United States.” He said.
This story initially took part in Fortune.com
