Fitch Ratings Raises Alarm Over US Tariffs

Fitch Ratings issued a stark warning on Thursday, highlighting that the United States tariffs have reached levels not seen since 1909, significantly increasing the risk of a recession. The credit rating agency emphasized that these tariffs could lead to higher consumer prices and lower corporate profits, adversely affecting the US economy.

Impact on US Economic Growth

The report suggests that the US economic growth is likely to slow down, falling short of the 1.7% projection made in March. "Higher prices will squeeze real wages, weighing on consumer spending, while lower profits and policy uncertainty will act as a drag on business investment," Fitch noted. This slowdown is not isolated to the US, as the growth outlook for the rest of the world, especially Asia, has also deteriorated.

Federal Reserve's Potential Response

Furthermore, Fitch anticipates that the Federal Reserve might adopt a more cautious stance regarding further interest rate cuts, in light of the "higher-than-anticipated" tariffs. This cautious approach could have far-reaching implications for the global economy.