BY INDRADIP GHOSH, GABRIEL BURIN AND MUMAL RATHORE
Risks to the Mexican, Canadian and American economies are piling up amid a chaotic implementation of US tariffs that has created deep uncertainties for businesses and decision-makers, according to Reuters polls of economists taken this week.
US inflation risks, which were already rising, have worsened, leaving the Federal Reserve on the sidelines for several months at least, while for Mexico, Canada and the US recession risks are also mounting, the surveys found.
US President Donald Trump’s administration has threatened 25 percent tariffs on imports of goods from its two neighboring trading partners and on Thursday removed them temporarily for a second time in only about six weeks of government.
This has made it nearly impossible to forecast growth, inflation and interest rates well into the future, economists say, even leaving the immediate Bank of Canada rate decision on March 12 – already likely to be nuanced – too difficult to call for some.
Seesaw tariff announcements have also unnerved Wall Street – the US benchmark S&P 500 index has given up all of its gains since Trump’s November election.
Economists at top banks and research institutions who are regular participants in Reuters surveys spoke of chaos when reached for forecasts, many expressing exasperation over Trump’s on-again-off-again approach to trade policy.
“Given this is so uncertain and that there are new announcements every hour or so, it’s kind of unclear what the environment is going to look like. It’s hard to deny the risk of a recession has intensified,” said Jonathan Millar, senior US economist at Barclays in New York.
“People are pushing off spending and that feeds through to a drag on growth, or perhaps even declines in growth if it’s strong enough. There’s a risk both in terms of higher inflation and downside for activity.”
Until now, economists have been loath to entirely factor into their forecasts the Trump administration’s volte-face on global trade policy, and the added uncertainty over how the change is being implemented is making forecasting even more difficult. — Reuters
