Fitch: US Tariffs Raise Recession Risks

Fitch Ratings warns that the U.S. reciprocal tariffs raise recession risks and limit the Federal Reserve’s ability to cut interest rates. The tariffs will increase consumer prices and reduce corporate profits, squeezing real wages and impacting consumer spending. This will also hinder business investment due to policy uncertainty.

Fitch revised its 2025 growth forecast, expecting slower growth than the previously projected 1.7%. Higher tariffs will put pressure on goods prices, especially as U.S. households face rising inflation expectations. This could make the Fed more cautious about rate cuts.

President Trump has continued his stance on matching tariffs imposed by other countries, including India, with an additional 26% tariff. Fitch believes the tariff hikes will have widespread negative effects on trade and U.S. businesses, making it harder for the economy to grow.