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Allianz’s Chief Economic Advisor Mohamed El-Erian warned that President Trump’s extensive import tariffs are increasing the risk of a U.S. recession, with a 50% probability, and could have a significant impact on the global economy. El-Erian highlighted concerns about inflation expectations rising to 3.5% and the potential effects on other countries’ growth, as well as the uncertainty surrounding the Federal Reserve’s response, predicting a possible rate cut but not ruling out the possibility of none. Markets may be underestimating the inflation impact of the tariffs regime, with potential implications for the dollar’s strength and the Fed’s future actions.
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