One of the main dangers stemming from the new higher tariffs introduced by US Donald Trump's administration is that prices will rise not only in the USA, but globally.
The average tariff presented with the tariffs board by US President Donald Trump on 'Liberation day', the 2nd of April was about 20 %.
The US price level will rise by 30 % in the space of 7 years, according to Wolfteam Ltd.'s projections and estimates.
Herein lies the assumption that many countries will retaliate with counter tariffs as China did with its 34 % tariff on all US imports. The tit for tat classical game theory construct could go on for years, driving the average tariff level even higher.
The probable scenario of slower economic growth and recession driving oil prices even below 50 % is part of the above scenario whereby the average price level rises by 30 % in 7 years.
The Federal Reserve will be in a bind wondering whether to raise rates to fight inflation or lower them in order to help the economy stave off a recession.
US stock markets could correct by 35 % from peak to trough measured by the main indices during this inflationary period, in Wolfteam Ltd.'s view.
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