Tariff Turbulence: Markets React as U.S. Fiscal Risks Mount

As global markets brace for escalating trade tensions, this AXA IM Macrocast offers a comprehensive analysis of the economic fallout from the proposed 50% U.S. tariff on EU imports and its broader implications.

• A 50% U.S. tariff could cause a 2% GDP contraction in the Eurozone, while the U.S. faces rising inflation (+2.2%) and a projected 0.8% GDP hit.

• Market response was counterintuitive: the dollar weakened despite tariff threats, reflecting concerns over U.S. fiscal policy and political risk.

• The euro gained, as investors questioned the sustainability of the U.S. policy trajectory under the “OBBB” fiscal package.

Discover how policy uncertainty is reshaping market expectations.