Schroders: Uncertain Outlook for Tariff Measures, US Inflation and Macroeconomic Environment May Face Challenges
Schroders published an article stating that inflation in the United States is rising under the shadow of tariffs. In June, U.S. inflation was driven by rising core commodity prices, with the furniture and furnishings category increasing by 1% month-on-month. Although prices of other goods remain relatively controlled, if all the tariff measures proposed by the Trump administration are fully implemented on August 1, the macro environment may face greater challenges. The firm predicts that if the tariffs are officially implemented, the effective tariff rate in the U.S. could rise to 24%, potentially causing inflation to increase by more than 1% (based on the firm's original forecast of an average inflation rate of 3.1% for the Consumer Price Index (CPI) until the end of 2026). At the same time, the firm predicts that U.S. Gross Domestic Product (GDP) could be dragged down by more than 0.5%. Although the market seems to believe that Trump's stance will soften, the risk of stagflation in the U.S. does exist, especially as prices of goods and services continue to rise, further impacting the tight labor market
According to the Zhitong Finance APP, Schroders Investment stated that rising tariffs cast a shadow over inflation in the United States. In June, U.S. inflation was driven by rising core commodity prices, with the furniture and furnishings category increasing by 1% month-on-month. Although prices of other goods remain relatively controlled, if all the tariff measures proposed by the Trump administration are fully implemented on August 1, the macro environment may face greater challenges.
The bank predicts that if the tariffs are officially implemented, the effective tariff rate in the U.S. could rise to 24%, which may cause inflation to increase by more than 1% (based on the bank's original forecast of an average inflation rate of 3.1% for the Consumer Price Index (CPI) until the end of 2026). At the same time, the bank predicts that U.S. Gross Domestic Product (GDP) could be dragged down by more than 0.5%.
Although the market seems to believe that Trump's stance will soften, the risk of stagflation in the U.S. does exist, especially as prices of goods and services continue to rise, further impacting the tight labor market
