TechFlow news, April 3 — According to Jinshi Data, China International Capital Corporation (CICC) published an analysis stating that Trump's announcement on April 2 of "reciprocal tariffs," exceeding market expectations, combines blanket tariffs with a "one country, one rate" approach, covering over 60 major economies.
Calculations show that if these tariffs are fully implemented, the U.S. effective tariff rate could rise sharply by 22.7 percentage points from 2.4% in 2024 to 25.1%, surpassing the tariff levels seen after the implementation of the Smoot-Hawley Tariff Act in 1930.
CICC believes the reciprocal tariffs may heighten uncertainty and market concerns, exacerbating the risk of stagflation in the U.S. economy. Estimates suggest the tariffs could raise U.S. PCE inflation by 1.9 percentage points and reduce real GDP growth by 1.3 percentage points, although they might also generate more than $700 billion in fiscal revenue. Facing stagflation risks, the Federal Reserve would likely opt to wait and see, making interest rate cuts unlikely in the short term. This would further increase downside economic risks and intensify downward pressure on markets.
