As of April 2, 2025, newswires are buzzing with discussions about the United States’ Liberation Day—the date when the current US Administration is expected to unveil a comprehensive set of tariffs targeting a wide range of the country’s trading partners. In this week’s Macro Weekly, we evaluate which of the United States’ largest trading partners are most likely to face the greatest impact from these measures.
The top ten list of affected trading partners features Mexico and Canada—hardly surprising given their free trade ties with the US under the United States-Mexico-Canada Agreement (USMCA). Also prominent are partners generating significant recent headlines, namely China and the European Union. A less-discussed but notable inclusion is Switzerland, with which the US maintains its third-largest trade deficit. Switzerland’s exports to the US are heavily concentrated in pharmaceuticals, precision machinery and tools, and precious metals and gems.
In summary, an aggressive tariff policy raises critical questions:
- Do tariffs generate sufficient inflationary pressure to undermine central banks’ hard-won efforts to tame inflation?
- Could retaliatory tariffs jeopardize the stability of the global economy?
Regarding the first, tariffs—and the threat of them—have so far served as a bargaining chip to secure more favorable trade terms. However, not all announced tariffs have been reversed, and those that persist are likely to drive inflationary pressures upward. The second question is more troubling. Should retaliatory tariffs be enacted, we foresee a risk of medium- to long-term damage to global trade, with ripple effects including elevated unemployment in export-dependent sectors and higher global price levels.
At the end, I need to focus on Rates, GDP and Spending.
“Subscribe to my blog and social media.” Thanks for your comments and support!
