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Trump's Trade Tariffs Would Be 'Highest In The Postwar Period' And Increase Inflation, Says Goldman Sachs Economist

Trump's Trade Tariffs Would Be 'Highest In The Postwar Period' And Increase Inflation, Says Goldman Sachs Economist
Trump's proposed tariffs could spark a global trade war that will shock advanced economies and raise inflation.

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Goldman Sachs Chief Economist Jan Hatzius has expressed concerns about former President Donald Trump's plans to impose a 10% across-the-board tariff on U.S. imported goods. Hatzius warned that such a move could lead to a trade war, causing significant monetary policy shocks across advanced economies and increasing inflation in the U.S. He also highlighted that the proposed tariffs are "large by postwar standards" and could have a substantial impact on the global economy. Hatzius predicts a 1.0% hit to GDP in the Euro area and a more moderate 0.5% hit in the U.S. due to the tariffs. Additionally, he noted that the uncertainty surrounding potential trade policies in a second Trump administration could lead to more intense trade conflicts. Hatzius emphasized that a trade war is not necessarily a reason for the Fed to hike rates, but it may delay cuts that might otherwise occur more quickly.

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