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President-elect Donald Trump’s proposed tariffs are expected to significantly hinder U.S. economic growth as we approach 2026, according to Seth Carpenter, the chief global economist at Morgan Stanley.
Trump has expressed intentions to implement a comprehensive tariff ranging from 10% to 20% on all imports, alongside additional tariffs of 60% to 100% on goods imported from China.
During the September presidential debate, he characterised this strategy as a method to extract financial contributions from competing nations.
The timing and speed of these tariff implementations remain uncertain. Should they be enacted simultaneously, Carpenter warned that it could create a “big negative shock” to the economy during a discussion at Morgan Stanley’s Asia Pacific Summit in Singapore. He reiterated Morgan Stanley’s expectation that these tariffs would be rolled out gradually over 2025, predicting they would contribute to rising inflation.
“Then into 2026, we think growth starts to come down a great deal in the U.S. because of those tariffs and some of the other policies,” he cautioned.
“Very clear, tariffs push up inflation. Very clear, tariffs are a drag on growth for the U.S., not just for the countries that the tariffs are put on,” Carpenter added.
Mark Malek, chief investment officer at Siebert brokerage, noted that if these proposed tariffs are enacted—especially on top of those already imposed by the Biden administration—numerous sectors including automotive, consumer electronics, machinery, construction, and retail would experience heightened inflation.
He pointed out that Trump’s proposed 60% tariff on Chinese imports and Biden’s existing 100% tariff on Chinese-made electric vehicles would “significantly impact” the auto industry.
Additionally, a universal 10% tariff on consumer electronics imports would increase costs for major companies like Tesla, Microsoft, and Apple, with these expenses likely being passed on to consumers.
Although the U.S. consumer price index rose by 2.6% in October compared to the previous year—slightly above September’s increase of 2.4%—inflation has generally decreased in the U.S. after several years of increases, prompting the Federal Reserve to lower interest rates.
If sweeping tariffs are implemented, Ben Emons, chief investment officer and founder of FedWatch Advisors, warned that markets might entirely eliminate expectations for interest rate cuts in 2025. He added that such tariffs could also “restrain” economic growth.