US Tariffs Reach Historic Highs, Raising Recession Fears

Fitch Ratings has issued a stark warning that the United States' newly imposed tariffs, now at levels last seen in 1909, significantly elevate the risk of the country sliding into a recession. This development comes as a blow to the economic growth projections, which are now expected to fall short of the 1.7% forecast made in March.

Impact on Consumer Prices and Corporate Profits

The agency highlighted that the tariff increases would lead to higher consumer prices and lower corporate profits within the US. "The resultant higher prices will squeeze real wages, dampening consumer spending, while reduced profits and heightened policy uncertainty will likely curb business investment," Fitch explained in its report.

Global Growth Outlook Deteriorates

Moreover, Fitch pointed out that the growth outlook for the global economy, especially in the Asian region, has worsened. The credit rating agency also suggested that the Federal Reserve might adopt a more cautious stance on further interest rate cuts in response to these "higher-than-anticipated" tariffs.