Analysis: The magnitude of equivalent tariffs exceeds market expectations, exacerbating the risk of "stagflation" in the US economy

BlockBeats News: On April 3rd, CICC analyzed that Trump announced "equivalent tariffs" on April 2nd, which exceeded market expectations. The equivalent tariffs adopt a combination of "carpet style" tariffs and "one country, one tax rate", covering over 60 major economies. Calculations show that if these tariffs were fully implemented, the effective tariff rate in the United States would increase significantly by 22.7 percentage points from 2.4% in 2024 to 25.1%, which would exceed the tariff level after the implementation of the Smoot Hawley Tariff Act in 1930. CICC believes that equivalent tariffs may increase uncertainty and market concerns, and exacerbate the risk of stagflation in the US economy. Calculations show that tariffs may push up US PCE inflation by 1.9 percentage points and reduce real GDP growth by 1.3 percentage points, although they may also bring in over $700 billion in fiscal revenue. Faced with the risk of stagflation, the Federal Reserve can only choose to wait and see, and it may be difficult to cut interest rates in the short term. This will further increase the risk of economic downturn and increase the downward adjustment pressure on the market. (Golden Ten)