Donald Trump's tariffs could create an economic 'tsunami' that threatens the US and the world

“This is a turning point not only for the US economy but also for the global economy. Many countries are likely to face recession,” said Olu Sonola, director of US economic research at Fitch Ratings.

While countries like Canada and Mexico are expected to be less affected, Asian countries, especially China and Vietnam, will be hit hardest, with the European Union and Japan falling into the middle group, according to Neil Shearing, chief economist at Capital Economics.

US President Donald Trump speaks at the "Make America Wealthy Again" event in the Rose Garden at the White House on April 2. Photo: White House

According to preliminary estimates, the average US tariff will reach about 22%, the highest level since 1910, surpassing even the level of the famous Smoot-Hawley Act of 1930.

Maurice Obstfeld, former chief economist at the International Monetary Fund, said: "Mr. Trump has essentially declared war on the global economy. This is a war that will certainly impact the US economy. The discriminatory tariffs between trading partners are creating chaos in international trade."

A team of economists at ING bank also described the tariffs as “Europe’s worst economic nightmare,” admitting that the exact impact of imposing them is almost impossible to predict.

Mr Trump’s tariffs are intended to finance tax cuts and encourage manufacturing to return to the US. But James Knightly, chief international economist at ING, said the measures would lead to a “painful transition period”, estimating that each American would face an additional $1,350 in costs per year, with prices rising by about 2.5%. He warned that this could be just the beginning and that there could be upward pressure on prices for some other services.

Bill Adams, chief economist at Comerica Bank, said the price increase would dampen consumer spending and weigh on economic growth and employment for the rest of 2025.

Economists are now lowering their growth forecasts, with the Atlanta Federal Reserve's GDPNow forecast showing a potential negative 1.4% annual growth rate in the first three quarters. The next quarter will also face challenges.

Stephen Miran, chairman of Mr Trump’s Council of Economic Advisers, said the government expects to raise about $500 billion from the plan. Miran said the revenue could be used to extend Mr Trump’s tax cuts and could even be enough to implement further tax cuts the president has promised.

Despite the “short-term bumps,” Miran stressed that the president is focused on the long-term transformation of the economy.

Ngoc Anh (according to Market Watch, FT)

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