Industry unsettled

How the tariffs are affecting the US economy

Strike by dockworkers in the USA (archive image)

(Bild: The Virginian-Pilot)

"We're bringing prosperity back to America," said US President Donald Trump at the weekend. For economists, however, it is clear that the tariff conflict is weighing on the economy and making a recession likely.

In a survey, the experts found that Trump's trade conflicts are unsettling consumers. "Mentions of trade and tariffs have risen sharply and have returned to levels not seen since 2019," says economist Stephanie Guichard from the Conference Board. If punitive tariffs are imposed, this is likely to lead to more inflation as US importers will have to pay the duties. They are likely to pass the higher costs on to their customers.

In fact, they already fear rising prices. In February, inflation rose from 5.2% to 6%, the highest level since May 2023. Egg prices have become a symbol of the population's fears of inflation: In some large cities, a dozen eggs now cost up to ten US dollars (the equivalent of 9.2 euros), as around 163 million chickens, turkeys and other birds have died or been culled from the virus since the outbreak of avian influenza in the USA.

Eggs currently cost up to €9.20 in the USA.

(Bild: Associated Press)

Labor market cools down
The labor market has cooled this year. In February, 151,000 new jobs were created and the unemployment rate stands at 4.1 percent. "We do not see the US economy slipping into a recession, but the labor market report for February should not stop market participants from continuing to speculate on it," said analyst Dirk Chlench from Landesbank Baden-Württemberg (LBBW). Trump himself is also likely to contribute to this: the plans for radical staff cuts in the federal administration pushed forward by his administration are beginning to leave their mark.

Stock market experts are also pessimistic about the future. "Donald Trump's trade policy of taking on Canada, Mexico and China with his tariff demands at the same time as widening the differences with Europe is causing unprecedented uncertainty among investors," said Manfred Hübner from the German investment consultancy Sentix.

In summary, the experts believe that tariffs against Mexico, China and Canada and the threat of trade conflicts are risks to growth and inflation. US economic growth could fall by 0.7 to 1.1 percentage points in the coming quarters.