The Bid 208: The Economic Impact of Tariffs: How the New U.S. Tariff Policy is Shaping Global Markets
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Feb 7, 2025 Glenn Purves, Global Head of Macro at BlackRock, and Catherine Kress, Head of Geopolitical Research at BlackRock, dive deep into the recent U.S. tariffs impacting global markets. They discuss how these tariffs stir market volatility and raise inflation concerns. The duo unpacks the vital effects on U.S. companies and supply chains, while analyzing the broader geopolitical landscape, particularly U.S.-China relations. They highlight new investment opportunities amidst these changing dynamics and share insights on navigating this complex economic terrain.
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Market Reaction to Tariffs
- Markets reacted intuitively to the initial tariff news, with equities down and short-term yields up.
- This suggests that markets anticipate tariffs weighing on US growth and pushing inflation up, potentially prompting a Fed response.
Dual Purpose of Tariffs
- Tariffs have a dual purpose: as a permanent tax and a negotiating tool.
- A 10% tariff is likely the target as a permanent tax, impacting US producers and consumers through inflation.
Impact of Tariff Levels
- The 10% tariff level is key.
- If tariffs exceed 10%, it could significantly rewire global supply chains, impacting growth more substantially.