“The Trump administration announced a 90-day pause in the retaliatory tariffs imposed in April, which will leave the US and China with 2025 tariff increases of +30pp and +15pp, respectively. While we had expected a de-escalation, the rate is lower than the +54pp tariff hike we had penciled into our baseline. We expect this move to leave the US effective tariff rate increase at +13pp, assuming that likely sectoral tariffs on pharmaceuticals and semiconductors take effect, slightly below our previous assumption of +15pp. In light of these developments and the meaningful easing in financial conditions over the last month, we are raising our 2025 growth forecast by 0.5pp to 1% Q4/Q4 and reducing our 12-month recession odds to 35%.”
Morten W. Langer
