US Tariffs Surge to Century-High Levels, Raising Recession Risks – Fitch Says
Fitch Ratings has warned that the latest wave of US tariff increases is reshaping the global economic landscape, elevating recession risks and limiting the Federal Reserve’s ability to cut interest rates.
The new tariffs, announced on April 2 under the Biden administration’s “Liberation Day” framework, far exceed the levels previously anticipated in Fitch’s March 2025 Global Economic Outlook (GEO). The measures impose a minimum 10% duty on all imports and significantly higher levies on goods from 57 trade partners.
As a result, effective tariff rates (ETR) on EU imports will surge to 20%, while levies on Chinese goods will jump to 64%—well above Fitch’s earlier projections of 15% and 35%, respectively. Other key Asian economies will also face steep increases, including Vietnam (46%), Thailand (36%), Taiwan (32%), India (26%), Korea (25%), Malaysia (24%), and Japan (24%). Some sectors, including semiconductors, pharmaceuticals, copper, and lumber, remain under negotiation.
Fitch now estimates that the US’s overall ETR will climb to 25%—the highest in over a century—surpassing its previous forecast of 18% for 2025. The credit ratings agency cautions that higher import costs will likely weigh on economic growth, which had been projected at 1.7% for 2025.
Consumer sentiment has already weakened sharply amid equity market volatility, while spending growth slowed in January and February, raising concerns over broader economic headwinds.
