Barclays: We expect 30% tariffs on China, 10% on other countries in baseline scenario

Barclays expects today’s tariff announcement to significantly raise US trade barriers, pushing the average tariff rate to 15%. The bank anticipates global growth to decelerate in 2025 as a result, with consumers likely boosting savings amid higher prices and economic uncertainty.

Key Points:

• Tariff Expectations:

  • 30% tariffs on China, 10% on other countries in baseline scenario.

  • This would raise the average US tariff rate to 15%, a historically elevated level.

• Consumer Behavior:

  • Personal savings rate remains low despite a higher unemployment rate (U3).

  • Anticipated consumer concerns—job losses, higher prices, and weaker equities—could drive a rise in savings, reducing consumption.

• Growth Forecasts:

  • Europe: 10% tariffs expected; forecast for Q4/Q4 2025 growth is 0.4%.

  • China: CY 2025 GDP growth at 4.3%, Q4/Q4 growth at 3.4%.

  • Global: Q4/Q4 2025 growth seen at 2.5%, with CY 2025 at 2.9%.

Conclusion:

Barclays views the anticipated US tariffs as a meaningful drag on global economic momentum, especially in 2025. While not the worst-case scenario, the expected average 15% tariff rate would still mark a sharp protectionist turn. Markets should prepare for slower global growth, more cautious consumer behavior, and potential financial market volatility.

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On this topic, here is a chart from Deutsche Bank highlighting historical tariff levels and where this will shake out.

This article was written by Adam Button at www.forexlive.com.