Morgan Stanley economists estimate that a near-term acceleration in inflation would occur with potential GDP growth deceleration of 1.4 percentage points due to proposed Republican tariff hikes.
The proposed tariffs could average between 25% to 35% across about half of US industries, indicating a significant inflationary impact while crimping investment and consumption.
With payroll gains dropping by 50,000 to 70,000, the economic impact of the proposed tariffs is expected to affect job growth significantly over the next few quarters.
The magnitude of economic effects from the tariff hikes will largely depend on specifics like scale, timing, retaliation by trading partners, and currency reaction.
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