President Trump’s “Liberation Day” tariffs, announced on April 2, impose levies—averaging a 22%-point increase, the most significant US tax hike since 1968. While the long-term goal is to boost US manufacturing and rebalance trade discrepancies, the immediate fallout may be severe.

Some economists warn of a 60% recession risk globally, driven by retaliatory tariffs, supply chain disruptions, and a sentiment shock. The tariffs, starting at 10% universally and reaching 54% for China, are already rattling markets, with the Dow dropping nearly 4% on April 3.

Supply-side damage looms as a lasting threat, even with expected fiscal and monetary easing offering only modest relief. A scenario where the rest of the world muddles through a US recession is possible but less likely than a global downturn. While these tariffs aim to strengthen domestic industries, the short-term pain—price hikes, job cuts, and an economic slowdown—can not be ignored.

BTG Recommends

Ingredient traders diversify sourcing beyond heavily tariffed regions like China, hedge against currency fluctuations, and monitor the Manufacturing Export Index (MEI) to anticipate demand shifts, ensuring resilience amid this trade upheaval.