The Trade War Is Escalating
US tariffs have reached levels not seen since the 1930s. With an effective average rate of 22% on imports, the United States has embarked on a protectionist escalation transforming global supply chains.
US Effective Average Rate
22%
Tariffs on China
145%
Active Retaliations
12 countries
Estimated GDP Impact
-0.8%
Who Gets Hit?
Automotive: The Most Exposed Sector
European and Japanese automakers face 25% tariffs on imported vehicles. BMW, Toyota and Volkswagen must choose between absorbing the cost (3-5% margin compression) or passing it to US consumers (10-15% volume drop).
Tech: The Asian Supply Chain Under Pressure
Electronic components from China, Taiwan and South Korea face surcharges of 10-60%. Apple, which assembles 95% of iPhones in China, faces a strategic dilemma: diversify to India (costly, slow) or absorb the extra cost (2-3% margin hit).
Agriculture: Retaliation Hits the Midwest
China retaliated by taxing American soybeans, corn and pork at 35%. Midwest farmers — Trump''s electoral base — are the first to suffer.
Attention
Tariffs work as a consumer tax. China doesn''t pay the tariff — the American importer does, passing it through to the final price. Core CPI has already risen +0.4% directly attributable to tariffs.
The Recession Scenario
The economist consensus (Bloomberg survey) puts US recession probability at 35% — up from 15% six months ago. The mechanism: tariffs raise prices → the Fed can''t cut rates → companies reduce investment → employment slows.
US Recession Probability (Consensus)
The most likely outcome remains a slowdown without recession — US growth of 1.0-1.5% instead of 2.5%, with persistent inflation ("stagflation light").
Key Takeaway
Conseil
Tariffs are a macro risk, not an immediate sell signal. Historically, equity markets absorbed trade wars (2018-2019: S&P 500 +29%). But current tariff levels are unprecedented. Watch manufacturing PMIs — if they drop below 48, recession risk becomes real.
Go from theory to practice
Our Excel templates integrate all the formulas and methodologies presented in this article.
Browse templates