The latest US trade tax round was released on April 2, local time, expected to further weaken the strength of the world economy that has just recovered from post-pandemic inflation, with record debts and affected by geopolitical conflicts.
Reuters pointed out that depending on how President Donald Trump and leaders of other countries act, the latest US tax bracket could also become a turning point for a globalization system that values the strength and reliability of the United States - the largest component of the system.
"Mr. Trump's tariffs risk destroying the global free trade order pioneered by the US itself since World War II," said Takahide Kiuchi, chief economist at Nomura Research Institute.
But in the coming months, prices will increase simply because new taxes are imposed on thousands of items that consumers and businesses around the world buy and sell, leading to reduced demand.
"I see this as a trend for the US and global economies towards poorer performance, more uncertainty and could move towards what we could call a global recession. We are entering a world that is getting worse for everyone because it is getting less efficient," said Antonio Fatas, a macroeconomic expert at INSEAD Business School in France. Mr. Antonio Fatas is also a consultant for the International Monetary Fund and the World Bank.
Under the new global tax rate imposed by President Trump, US tax on all imports has increased from 2.5% in 2024 to 22,2% - the most recent tax rate applied in 1910.
This is a turning point not only for the US economy but also for the global economy. Many countries are likely to fall into recession," said Olu Sonola, head of US economic research at Fitch Ratings.
Speaking at Reuters this week, IMF managing director Kristalina Georgieva said there were no signs of a global recession at the moment. However, the IMF is expected to soon make a small "adjustment" to the global growth forecast to 3.3% in 2025.
Reuters noted that the impact of the latest US tax round on the economies of countries will be very different, because the tax rate applied by the US ranges from 10% to 49%.
If the outcome of the new tax cycle is a wider trade war, it will have consequences for manufacturers like China, who have to seek new markets amid falling consumer demand globally.
If tariffs push the US into recession, it will severely affect developing countries, which have a fate closely linked to the world's largest economy.
"What happens in the US is not limited to the US. The economy is too big and too connected to the rest of the world through trade and capital flows that make the rest of the world unable to be affected," - Barry Eichengreen, professor of economics and political science of the University of California, Berkeley, said.
The spillover of the latest US tax round to policymakers at central and government banks is also likely to be huge, according to Reuters. The disruption of the supply chain of consumer price control capital over the past years could lead to a "hot" inflation trend of more than 2% - the target that central banks agreed could be contained.
Governments in economies with weaker output growth will have more difficulty paying the world's record debt of $318 trillion as well as have more difficulty finding funding for budget priorities, from defense spending to climate change response and welfare.
