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Yahoo
9 hours ago
- Business
- Yahoo
I'm an Economist: My Predictions for Inflation Under President Trump
In Donald Trump's second term, some experts believe the inflation trajectory could continuously point upward and go higher, especially when tariffs, deficits and other policies that would increase inflation are factored in. While forecasting economic conditions isn't an exact science, experts can speculate using knowledge about the past and some clues about the future. Find Out: For You: A report from Allianz Research provides insights into how inflation could unfold under Trump and his administration during round number two. The report shows that while some policies could increase inflation in the short term, the overall inflation path would be shaped by factors like the Federal Reserve's actions and broader economic conditions. GOBankingRates spoke to Maxime Darmet, senior U.S. economist at Allianz Trade, who co-authored a report by Allianz Trade research, titled 'Trumponomics: the Sequel' on this very subject. Here are some key insights. No matter the politics, President Trump has his work cut out for him when it comes to dealing with inflation. The U.S. economy was pretty sturdy before he took office for the second time, but it now shows interest rates climbing and general economic unrest. 'While the U.S. has remained remarkably resilient despite rising interest rates and global uncertainty, it has become more prone to inflation volatility, given a larger exposure to frequent supply shocks and structural labor shortages,' Darmet said. 'Against this backdrop, demand-boosting policies — such as tax cuts — or supply-hurting policies — such as tariff hikes — could re-ignite inflation faster and push up interest rates.' The White House administration should tread carefully with its economic plans. Big tax cuts might sound great at first — they put more cash in your wallet. However, if there are limited goods to spend that money on, it easily overheats the economy and spirals inflation even higher. Read Next: Trump never seems to miss the chance to double down on protectionist policies to boost U.S. manufacturing. He has proposed tariff increases, including 10% on all imports and 60% on Chinese goods. The Allianz report discusses two potential scenarios — one in which the U.S. tariff rate rises from 2.5% up to 4.3%. However, another scenario, in which Trump implements all the tariffs he has threatened, could push the rate to around 12%. 'However, in both cases, we would expect Trump to target goods that are not critical for the U.S. economy, equivalent to 55% of imported Chinese goods and 70% of EU goods,' Darmet wrote. 'China's textiles sector and the U.S. transportation equipment sector would be the hardest hit.' Despite some whiplash court decisions, Trump has successfully enacted a series of steep protective tariffs affecting nearly all goods imported into the United States. Between January and April 2025, the average effective U.S. tariff rate rose from 2.5% to an estimated 27% — the highest level in over a century. Of course, Trump isn't exactly working with a fresh economic slate in the White House, as he inherited the budget situation from Biden's term. Trump's bold promises of slashing taxes and ramping up spending quickly ran into some harsh fiscal realities. He'll have to perform some nifty accounting tricks to pull off his economic vision without sending bond market investors into a total panic over the stability of America's finances. One potential gambit would be to hike all those tariffs and trade taxes to fund the tax cut promises while scaling back Biden's pricier policy initiatives. So, unless the Trump 2.0 economy is some world-beater of growth, most forecasters see the new administration ultimately having to pump the brakes on fiscal loosening after maybe a year of smaller tax cuts or spending bumps. Otherwise, the whole economic agenda could wind up crumbling under the weight of unsustainable budgets and debt — something that fiscal conservatives in Trump's party would likely refuse to accept. That deficit dynamic keeps economic advisors up at night as they game-plan Trump's potential second term. Trump has said a goal is to ramp up U.S. manufacturing and reduce foreign manufacturing relationships. However, the report suggests that such policies need to be carefully designed. 'To yield benefits, industrial policy must avoid the risk of targeting too many objectives. In that respect, Trump's ambitious Strategic National Manufacturing Initiative (SNMI) may disappoint when set against its numerous goals and the reality that the U.S. does not have a competitive advantage in many sectors,' Darmet wrote. The Fed's response would shape inflation under the second Trump term. 'Against this backdrop, we would expect the Federal Reserve to be forced to pause its easing cycle in 2025 and the U.S. 10-year yield to stay above 4%,' Darmet wrote. This could control inflation but weigh on growth and markets initially. The report highlights the delicate balance the Fed would face between inflation and economic impacts. Caitlyn Moorhead contributed to the reporting for this article. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses 8 Common Mistakes Retirees Make With Their Social Security Checks This article originally appeared on I'm an Economist: My Predictions for Inflation Under President Trump
Gulf Insider
3 days ago
- Business
- Gulf Insider
"Worse Than The 2008 Financial Crisis" – Germany Becomes A Nation Of Bankruptcy With No End In Sight
Germany is bracing for a continued surge in major insolvencies throughout 2025 and even 2026, according to a recent analysis by credit insurer Allianz Trade. This all comes after a disastrous 2024, which saw a record-breaking number of bankruptcies in the country. Allianz Trade forecasts an overall increase of 11 percent in corporate insolvencies in Germany this year, reaching approximately 24,400 cases. A further 3 percent rise to 25,050 cases is anticipated for 2026. These insolvencies put an estimated 210,000 jobs at risk across Germany. In the first quarter of this year, 16 large German companies—those with revenues of €50 million or more—filed for insolvency. While this is a slight decrease of three cases compared to the same period last year, it's double the number recorded in the first quarter of 2023. Milo Bogaerts, CEO of Allianz Trade in Germany, Austria, and Switzerland, expressed concern over the persistently high number of major insolvencies, attributing it partly to U.S. President Donald Trump's tariff policy. He warned that no respite is expected, even after 2024, which was a record-breaking negative year for insolvencies. 'Given the bleak economic outlook both in Germany and in global trade, and the many uncertainties caused by the tariff storm, we expect many major insolvencies and thus significant losses to continue in 2025,' Bogaerts stated. He added that these large-scale insolvencies will likely have a ripple effect on supplier companies, potentially creating 'particularly large holes in their coffers' and impacting supply chains. However, alarm bells are ringing across the country. The Federal Association of German Industry (BDI) published a declaration by more than 100 associations at the beginning of April where they directly addressed the ruling CDU and SPD. At the time, they were still working on a coalition agreement. The BDI stated: 'In the past few weeks, the economic situation has deteriorated dramatically. The facts are undeniable. Germany is in a serious economic crisis. A comparison with other countries shows that this crisis is primarily homemade.' The BDI is also apparently unhappy with the coalition's details on tax policy. 'In terms of tax policy, the coalition lags behind what is necessary. In the future, every scope must be used to relieve companies in order for the tax burden to quickly become internationally competitive,' said Tanja Gönner, BDI's general manager. 'The contract rightly formulates an ambitious modernization agenda for the state and administration, which must now also be followed by a determined implementation…. The bottom line is that we will measure the federal government by whether it will make the state more efficient and modernized.' 🇩🇪🚨 Ford Germany plans to cut 4,000 jobs as Berlin's economic disaster continues to unfold."The entire automotive industry is in crisis all over the world, in Europe and especially in Germany. This transition to electro-mobility is hitting us very, very hard." — Remix News & Views (@RMXnews) November 22, 2024 Click here to read more…
Yahoo
30-05-2025
- Business
- Yahoo
Most companies say they'll have to raise prices due to Trump tariffs: Survey
Most companies, especially in the U.S. and China, say they will have to increase prices because of the Trump administration's sweeping tariffs on dozens of imports, according to a poll released Wednesday. The latest Allianz Trade Global Survey compares responses from before and after Trump's 'Liberation Day' tariffs were imposed April 2 and found that price hikes will likely be the go-to strategy in response to the trade war. Most 'reciprocal' tariffs are currently under a pause due to negotiations, but a 10 percent baseline tax is still in place. Globally, 38 percent of companies say they will increase prices in response to the tariffs — a 7 point increase from before President Trump announced the new import taxes, the report shows. The strategy to raise prices because of higher tariffs saw the strongest global increase, but most notably in the U.S. and China, which Allianz Trade said is likely due to 'the fact that tariffs reached levels that were way too high to stomach.' In the U.S., 54 percent of companies said they plan to increase prices, citing the tariffs. Ahead of the 'Liberation Day' rollout, 46 percent of U.S. companies said they would raise prices, according to the survey. In China, 45 percent of companies said they will raise prices after last month's announcement, a 16 percent increase, the research found. The increase, according to Allianz, suggests the U.S. and China 'could be particularly proactive in adjusting their pricing strategies in response to higher tariffs.' 'Even though the new trade deal brings the U.S. average import tariff rate on China to 39 percent, down from an eye-watering 103 percent, this remains much higher than the 13 percent rate applied before the second Trump administration,' said Françoise Huang, senior economist for Asia Pacific and trade at Allianz Trade. Despite recent developments between the U.S. and China, including a 90-day pause on most retaliatory tariffs, experts said the strategy will likely remain the same. 'Despite the recent positive developments, the trade war persists and volatility in trade policies means that decoupling is likely to gradually continue,' researchers wrote. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Fibre2Fashion
25-05-2025
- Business
- Fibre2Fashion
Export losses of $305 bn expected in 2025: Allianz Trade Global Survey
The wave of new US tariffs has dramatically dampened the mood among exporters, with 42 per cent of companies surveyed worldwide now expecting a drop in their export revenues between 2 per cent and 10 per cent, according to a study released recently in Hamburg by credit insurer Allianz Trade. Before the so-called 'Liberation Day', when US President Donald Trump announced new tariffs against nearly all trading partners in early April, only 5 per cent of companies anticipated such a drop. Positive export forecasts with expected revenue increases have more than halved, falling to just 40 per cent. Allianz Trade chief executive officer Aylin Somersan Coqui said that globally, export losses of $305 billion are expected in 2025. The wave of new US tariffs has dramatically dampened the mood among exporters, with 42 per cent of firms surveyed worldwide now expecting a 2-10 -per cent drop in revenues, a study by Allianz Trade found. Positive export forecasts with expected revenue rises have more than halved, falling to 40 per cent. Nearly half expect a rising risk of payment defaultsâ€'especially in the US, Italy and the UK. The credit insurer surveyed 4,500 exporters in Germany, France, Italy, Spain, Poland, the United Kingdom, the United States, Singapore, and China about global trade in March and April. The responses became noticeably more pessimistic following Trump's announcements. In Germany, 39 per cent of respondents expect a decline in their export revenues. Meanwhile, some of the new tariffs against the European Union (EU) and China have been put on hold to allow 90 days for negotiations. With new deals, Trump aims to put trade relations with numerous countries on a new footing. "The big stockpiling is likely entering its second round now," said Allianz Trade expert Jasmin Groschl. "In the coming months, companies will try to export as much as they can—and at the same time, fill their own warehouses with goods needed for their own production and business," she noted. Twenty-four per cent of German companies reported that they had already started this process before the US election in November 2024. Many more firms became active after the election. Some companies may resort to drastic measures. In Germany, 34 per cent of surveyed firms said they are considering a temporary halt to production. This is especially the case in industries that are heavily dependent on imported intermediate goods. Globally, the figure stands at 27 per cent. According to Groschl, smaller suppliers could be forced out of the market, while larger corporations might be able to weather such measures. "However, such a step is likely to be taken only in extreme cases," he noted. Nearly half of respondents worldwide expect an increased risk of payment defaults—especially in the United States, Italy and the United Kingdom. In Germany, 37 per cent anticipate deteriorating payment discipline, and 34 per cent expect more payment defaults. To cope with their own higher costs, 38 per cent of companies globally said they intend to pass them on to customers. This intention is particularly strong in the United States, at 54 per cent. German exporters are more cautious, with only 32 per cent planning price increases. In fact, 17 percent in Germany even plan to lower prices to maintain market share. Fibre2Fashion News Desk (DS)
Yahoo
23-05-2025
- Business
- Yahoo
Most companies say they'll have to raise prices due to Trump tariffs: Survey
Most companies, especially in the U.S. and China, say they will have to increase prices because of the Trump administration's sweeping tariffs on dozens of imports, according to a poll released Wednesday. The latest Allianz Trade Global Survey compares responses from before and after Trump's 'Liberation Day' tariffs were imposed April 2 and found that price hikes will likely be the go-to strategy in response to the trade war. Most 'reciprocal' tariffs are currently under a pause due to negotiations, but a 10 percent baseline tax is still in place. Globally, 38 percent of companies say they will increase prices in response to the tariffs — a 7 point increase from before President Trump announced the new import taxes, the report shows. The strategy to raise prices because of higher tariffs saw the strongest global increase, but most notably in the U.S. and China, which Allianz Trade said is likely due to 'the fact that tariffs reached levels that were way too high to stomach.' In the U.S., 54 percent of companies said they plan to increase prices, citing the tariffs. Ahead of the 'Liberation Day' rollout, 46 percent of U.S. companies said they would raise prices, according to the survey. In China, 45 percent of companies said they will raise prices after last month's announcement, a 16 percent increase, the research found. The increase, according to Allianz, suggests the U.S. and China 'could be particularly proactive in adjusting their pricing strategies in response to higher tariffs.' 'Even though the new trade deal brings the U.S. average import tariff rate on China to 39 percent, down from an eye-watering 103 percent, this remains much higher than the 13 percent rate applied before the second Trump administration,' said Françoise Huang, senior economist for Asia Pacific and trade at Allianz Trade. Despite recent developments between the U.S. and China, including a 90-day pause on most retaliatory tariffs, experts said the strategy will likely remain the same. 'Despite the recent positive developments, the trade war persists and volatility in trade policies means that decoupling is likely to gradually continue,' researchers wrote. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
