​Economist warns Trump's tariffs could trigger global recession

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00:00Thank you very much.

00:07Reciprocal tariffs on countries throughout the world, reciprocal.

00:11That means they do it to us, and we do it to them.

00:16Nobody in the world wins.

00:21My fellow Americans, this is Liberation Day, waiting for a long time.

00:28Yes, they appear very protectionist for the United States, but really, it's higher costs

00:34around the world.

00:36It'll flow through to consumers, it'll flow through to businesses, but everybody on either

00:41side of the oceans will be paying more back and forth.

00:45It sort of just brings the overall global price level up.

01:02The announcements last night just added more uncertainty and are dragging it out.

01:07The risk of that is that we are seeing businesses and consumers really on pause.

01:14This economy was in good shape without this uncertainty, so we know we have a stable base,

01:21but as businesses and consumers pause, we could get a self-fulfilling slowdown.

01:26We even could eventually get a recession if businesses in particular feel they can't make

01:32investment decisions.

01:39The worst case scenario is that the administration says, no, we're simply going to stick with

01:44these tariffs and in a sense, beggar our neighbors and bleed them until they basically give up.

01:54In that case, yes, I think that the economy will slip into recession.

01:59I think we will end up seeing a bear market precipitate the announcement of a recession.

02:06I think that what's going to happen is not what Trump wants.

02:17Trump's announcement yesterday certainly was a bit of a surprise to the U.S. market.

02:22What was surprising was the magnitude of the initial announcement.

02:26We could argue that the market spent first quarter already discounting some expectation

02:32of broader tariffs.

02:34We can't say tariffs are a surprise.

02:37President Trump talked about them throughout the election and throughout starting his presidency.

02:45Investors know this is coming, knew this was coming.

02:47I think that the market was looking for more final clarity in the announcement.

02:54Instead, we got what we really should expect from this administration, which is a very

02:59clear starting point.

03:01We have a president who believes in negotiation, who doesn't believe in an initial final say.

03:08What we're seeing in the markets today, down further, is again an attempt to work in, well,

03:15if what was announced is the final, then things look worse than we thought.

03:31Well, I don't know the specifics.

03:40I do know how they came up with the formula, but I cannot offer a better formula.

03:46The real question that I would have is, why did they come out with such a draconian approach

03:53to begin with?

03:55It simply reminds me of the trade negotiations where management and unions start off being

04:03poles apart with their demands, and then they end up meeting somewhere in the middle.

04:10Right now, we understand what the US's position is.

04:13It's a draconian measure, much worse than anticipated.

04:18Stocks as a result are in freefall because of the expected inflationary impact from these

04:25on GDP and on earnings.

04:32The base case is the analysis that was offered by our Washington strategy group called Washington

04:40Analysis, basically saying that it's likely to be a global baseline tariff of 10% on all

04:49imports.

04:50So in a sense, that would be the goal to bring down from this wide range of tariffs that

04:56currently are anywhere from 10% to 54%.

05:00The goal is to bring them down to all at about the 10% level.

05:06And we think that that is something that the administration is going to work toward.

05:19My outlook is that because our base case says that there will attempt to be negotiations

05:35to bring down these tariffs, that we don't see it ending up in a recession.

05:40We are seeing the stock market get into what we call an oversold situation, where essentially

05:47there is now blood in the streets.

05:50And opportunistic investors should look to be nibbling at the stock market and taking

05:56advantage of it.

05:57There's an old saying that stocks tend to pop after a drop.

06:03And I think that that is a possibility here as well.

Economist warns Trump's tariffs could trigger global recession

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Economist warns Trump's tariffs could trigger global recession