Barclays Analysts Say They Are "uneasy About Risk Assets" Amid Trump Trade Turmoil

An anticipated slowdown in the world economy in 2025 sparked by uncertainty around the impact of U.S. President Donald Trump’s tariff plans has taken away from the appeal of riskier assets like stocks, according to analysts at Barclays.

In a note to clients on Thursday, the brokerage said it now expects global growth to come in at just 2.9% this year, down from 3.3% in 2024.

"Global supply chains are about be upended, which means prices will rise, final demand will drop, and growth will slow," the analysts said.

A murky outlook around Trump’s proposals for sweeping tariffs on both friends and adversaries alike are seen denting the ability of businesses to plan for the future, the analysts said, adding that consumers are also likely to ratchet down spending to shield their finances from potential levy-induced headwinds.

Since returning to the White House in January, Trump has raised tariffs on China to up to 30% and placed a 25% duty on steel and aluminum. He has also threatened to roll out tariffs on a range of sectors and institute measures to match foreign tariffs on U.S. goods.

On Wednesday afternoon, Trump said he would place 25% tariffs on automotive imports into the U.S., making good on a pledge to penalize foreign manufacturers of cars and trucks. The action, along with what the White House has dubbed "reciprocal" tariffs, are set to take effect on April 3.

Trump has argued that the tariffs are necessary to offset lost revenues from proposed tax breaks and help bring industrial jobs back to the U.S.

"We do not expect all the tariff threats to come to fruition; the economic damage would be severe, including for the US, and there seem to be off-ramps in some cases," the Barclays analysts argued.

They said that although worldwide economic growth is projected to slow and is broadly "uninspiring," they do not expect it to slide into recession.

Against this backdrop, the strategists noted that that are "uneasy" about risk assets "for the first time in several quarters," adding that they now recommend core fixed income over equities.

"Just months into the new year, the world economy is staring down the barrel of the tariff gun –- and the results are unlikely to be pretty," the analysts wrote.

Source: Investing