UBS warns that Trump’s tariffs could pose large risks to economic growth

Seeking Alpha News (Thu, 03-Apr 8:22 AM)

UBS raised concerns Thursday morning about the potential economic impact of the U.S. administration's proposed tariff plan. The global investment bank argued that the tariffs could pose significant headwinds to growth and overall economic health.

According to UBS, the magnitude of the tariffs under consideration is substantial enough to jeopardize the ongoing economic expansion if they remain in place for an extended period of time. The investment bank emphasized that the inflationary effects of these tariffs would likely be noticable as well. 

"We expect the inflation impact of these new tariff rates to be considerable," UBS stated. They warned that the cost of imports would increase significantly, contributing to higher prices across the economy. 

Through simple “back-of-envelope calculations” UBS suggested that if the proposed tariffs were fully implemented and remained in effect long-term, inflation could surge to around 5%. This would occur as businesses adjust to the increased cost of foreign goods, which would ultimately be passed on to consumers. 

UBS’s caution underscores the potential for the tariff plan to disrupt the broader economic landscape, with inflation and growth potentially taking a hit if the tariffs are enacted permanently. 

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