Former US Treasury Secretary Yellen: Trump tariffs to have ‘tremendously adverse’ impact

• Trump tariffs to have ‘tremendously adverse’ impact on the US economy.
• They ‘hobble’ companies that rely on critical minerals supplies from China.
• About 40% of goods imported into the country were inputs for domestic production.
• The odds for a recession have gone up.
• Tariffs could be particularly problematic for the US clean energy sector.
• We are highly dependent on China for most of the critical minerals that go into the clean energy technologies.

It’s a very consensus view that tariffs will likely have an adverse impact on the US economy and that the recession probabilities have gone up. The market priced that in soon after the April 2 announcement, but started to price out that view after Trump’s pause on April 9.

The market is now looking forward to positive resolutions that will eventually trigger the opposite effect: the US economy will bounce back and economic activity will rise. That’s why trade talks and negotiations are critical. If they disappoint the market, then we will likely go back to price in the recession.

This article was written by Giuseppe Dellamotta at www.forexlive.com.