Source: ITR Economics – February 27, 2025
Although we are not forecasting a US recession, learn about the economic implications of the tariffs on China, and for steel and aluminum.
Additional tariffs against China went into effect February 4. Additionally, Tariffs have been announced for steel and aluminum. Those are scheduled to go into effect March 12. There may or may not be a 25% tariff imposed upon Canada and Mexico (our second and third largest trading partners respectively after Europe). It is no wonder there is consternation and uncertainty in terms of the general state of the economy and concerning supply chains and pricing.
ITR’s macroeconomic perspective is that the tariffs are not going to tip the US into recession. The numbers do not indicate that a recession is a reasonable expectation. Trade is simply not that large a percentage of US GDP comparatively, and the US economy is the largest on the planet. The US trade deficit in goods amounted to 3.1% of US GDP in 2024. The US is 26.3% of global GDP. By comparison, China is 16.8% of the global economy. Size matters, especially when trade is a smaller slice of the US economy versus China, Canada, Mexico, and others.