- President Donald Trump’s prices could reach an effective rate of up to 30%, against 25% in the context of its recently announced plans, according to UBS analysts. A rate that stiff would mark the highest level in more than 150 years. But after a cycle of reprisals and climbing, UBS see the prices go up later this year.
The prices of the “liberation day” of President Donald Trump already send rates to the highest levels of a century, but they could increase even more.
According to a UBS analysts note Friday, the last salvo of import taxes will send the effective rate to 25%, against 2.5% before the 2024 elections. But it is unlikely that it stops there.
“We believe that the EU and China are likely to retaliate and that the” reciprocal “approach to American prices means that reprisals by trade partners are likely to be welcomed with even higher American tariffs,” they wrote.
In addition, some of the imports that were not targeted last week can be subject to future surveys and may lose their exemptions, said UBS, noting that the Trump administration has a “high degree of conviction” in the background of restrictive trade policies.
Trump added a 34% levy on Wednesday on China on Wednesday which will bring the total rate to 54% and hit the European Union with a 20% right. China has already retaliated with its own price of 34%, and the EU said it was planning to answer as well.
UBS expects the actual American rate rate to reach the range from 25% to 30%. According to data from Fitch dimensionsAn effective rate rate of 25% would already be the highest since 1909.
And if he reached 30%, it would be the highest since 1872 – when the hero of the civil war Ulysses S. Grant was president and the American economy was still in the first stages of the industrial revolution.
But in the third trimester, UBS saw prices start to go back and expect that the effective rate ends 2025 to 10% to 15%.
“Various individual countries have suggested that they do not intend to retaliate and that treaties with individual countries could start reducing the overall effective rate rate,” analysts said.
In fact, Vietnam confirmed during the weekend that it proposed to delete all prices on American imports, and Trump administration officials said on Sunday that more than 50 countries had contacted the White House for pricing talks.
Trump will also be faced with more pressure to negotiate, predicted UBS, citing potential challenges at the legal basis of his prices and his vast business lobbying to reduce policies or cut off exceptions.
And as the mid-term electoral season approaches, political calculations can also soften Trump’s position. Republican senator Ted Cruz warned against a political “bloodbath” in 2026 if the prices cause a recession.
UBS sees American GDP develop by less than 1% in 2025, including an intra-year recession that will see GDP decrease by 1% from one peak to another. Actions will bounce back, but analysts have reduced their S&P 500 end -of -year objective to 5,800, compared to 6,400.
“We think that certain” ramps out of ramps “potentially acceptable which could allow all parties to declare victory could include a combination of higher European defense expenditure, of measures in Asia to prevent the spill of the excess supply on the global markets, reductions in existing prices or non-tariff obstacles or measures to increase investments in the United States,” said UBS.
This story was initially presented on Fortune.com
