Societe Generale Warns Trump Tariffs to Raise Prices, Harm Economy

Societe Generale, a prominent French bank, has voiced significant concerns regarding the economic implications of President Donald Trump's tariff policies. The bank's economist has asserted that these tariffs are unlikely to revive the U.S. manufacturing sector and will instead inflict harm on the American economy. The economist's analysis indicates that the primary effect of these tariffs will be an increase in consumer prices rather than a stimulation of domestic manufacturing.

The tariffs, which have been applied to a variety of goods, are part of a broader strategy aimed at reducing the U.S. trade deficit and exerting pressure on other countries to make concessions. However, the bank's economist argues that these measures are unlikely to achieve their intended objectives. Instead, they are likely to result in higher costs for American consumers and businesses, as well as potential retaliatory actions from other countries. This could escalate into a trade war, which would be detrimental to the global economy.

The bank's analysis also underscores the potential for these tariffs to disrupt supply chains and increase uncertainty for businesses. This could lead to a slowdown in investment and economic growth, as companies become more cautious about their future prospects. The economist has advocated for a more balanced approach to trade policy, one that focuses on promoting free and fair trade rather than protectionism. This would help ensure that the U.S. economy remains competitive and continues to grow in the long term.

This week, the President reignited trade tensions by sending letters to multiple countries, threatening to increase tariffs starting from August 1. These threats include imposing a 50% tariff on Brazil and a 35% tariff on Canada. Additionally, the President hinted at the possibility of imposing a 15% to 20% tariff on most trading partners, which is higher than the current global baseline tax rate of 10%.

The economist emphasized that the unpredictability of these tariff measures makes it difficult for businesses to plan for the future. "If businesses cannot determine whether these tariff measures are permanent, will they be willing to invest heavily in the U.S. to produce goods that are currently produced at a much lower cost outside the U.S.?" the economist questioned. "I believe the answer is no. This alone is enough to sow the seeds of policy failure."

The economist further predicted that these tariffs will ultimately harm American interests, particularly by driving up consumer prices. "These tariffs will have no effect on bringing manufacturing production or jobs back to the U.S.," the economist stated. "In the end, the real victim will be the U.S. economy."