Trump tariff threats are bad, but the uncertainty they instil is much worse

Trump’s tariff threats create economic drag through higher costs and disrupted trade, but the uncertainty they generate paralyzes business investment even more. Recent analyses confirm tariffs have slowed US GDP growth projections to 1.6% in 2026, with global effects amplifying the strain. This volatility echoes past trade wars, where firms delay expansions amid policy flux.​

Tariffs imposed since April 2025 have raised US average rates to 19.5%, the highest since 1933, fueling inflation in goods like food and reducing consumer spending. OECD forecasts link these to a US GDP drop from 2.4% in 2024 to 1.6% in 2026, with emerging markets like China facing moderated growth at 4.4%.​

Businesses halt investments when policies shift unpredictably, as IMF leaders note: “uncertainty is the new normal” under Trump. UK and EU firms, post-2025 trade deals, now face renewed risks from threats like 25% tariffs by June, stalling recovery amid budget crises.​

Full tariff effects emerge in 2026 as import stockpiles dwindle, potentially spiking inflation and unemployment. Trump has reversed threats before—earning the “TACO” moniker—offering hope, alongside Supreme Court challenges and AI-driven growth offsets. Global trade growth may slow to 2.2% this year.