The Bank for International Settlements (BIS) highlights the consequences of Donald Trump's tariff policies and their impact on the US economy and global financial markets.
Impact of Trump's Tariffs on the Economy
BIS General Manager Agustin Carstens stated that Trump's tariffs raised levels of uncertainty in the economy. He noted: "We were meant to have a soft landing — everything was going according to plan. Then we had this very substantive period of volatility with the threat that tariffs would make it more difficult to converge towards 2% inflation in some countries."
Vulnerability of the Global Economy
Carstens warned that the global economy is susceptible to significant disruptions due to climate and geopolitical changes, an aging population, and supply chain issues. He emphasized that economic growth potential is declining, with increasing risks to price stability and the financial system.
BIS Recommendations to Support Economic Growth
The BIS recommends reducing trade barriers and bureaucracy to stimulate growth. Additionally, the bank called for more flexible labor policies, increased public investment, and fiscal repair. Officials also warned against easing banking regulations and emphasized the need for caution among central banks regarding inflation.
The BIS report thoroughly examines potential risks associated with economic policy and offers recommendations for stabilizing the situation. Emphasis is placed on the need to balance growth and inflation, which is a pressing task for global financial entities.
