Analysts at BCA Research noted that the trade deal reached by the Trump administration with China earlier this week came sooner than expected and reduces the likelihood of a recession in the United States.
However, strategists led by Peter Berezin said that a recession in the world’s largest economy remains their “base case” scenario, pointing out that the effective U.S. tariff rate is still at its highest level since the 1930s.
In a client note, the analysts wrote: “Despite the reduction in tariffs, they remain high enough to weigh on growth—especially given that the underlying economic momentum in the U.S. was already weakening heading into 2025.”
On Monday, Washington and Beijing announced they had reached a deal to reduce mutual high tariffs and pause new tariffs for 90 days.
This move followed President Donald Trump’s imposition of tariffs of at least 145% on China, prompting Beijing to retaliate with its own tariffs of 125%.
Following the agreement, U.S. tariffs on China were reduced to 30%, including a base tariff of 10% and a separate 20% tariff tied to Beijing’s alleged role in the illegal flow of fentanyl. In return, China lowered its tariffs on U.S. goods to 10%
-255*160.webp)
