1、Flash Macro UpdateTARIFFS|April 2025Henry H.McVeyHead of Global Macro,Balance Sheet&Risk,CIO of KKRs Balance SDave McNellisCo-Head of Global Macro&Asset AllocationAidan CorcoranManaging Director,Co-Head of Global MacroChangchun HuaManaging Director,Global MacroBrian LeungRichard BullockEzra MaxMigue

2、l MontoyaBola OkunadeAsim AliAllen LiuWhat You Need to KnowHow are we thinking about the Trump administrations approach to tariffs?The Liberation Day tariff plan President Trump rolled out on April 2nd was far more aggressive than we and markets expected.Inflation will rise and growth will be dented

3、 more than we originally anticipated,with a mild U.S.recession risk now on the table in coming quarters.See below for details,but for 2025,we lower U.S.GDP to 0.5%growth from 2.1%while Europe falls to 0.6%from 1.0%.Meanwhile,in China,we forecast 4.3%from 4.4%previously.A key area on which to focus n

4、ow includes shifting stimulus drivers around the world.For example,the U.S.is in a unique position in that it has both a fiscal headwind from DOGE(around 60 basis points in 2025)and the negative impact from tariffs(approximately 250 basis points in 2025).By comparison,both Europe,Germany in particul

5、ar,and China are accelerating fiscal tailwinds,helping offset drags from tariffs(Exhibit 5).So,the asynchronous global recovery is shifting from the Americas to Europe and Asia,an important change,we believe.Looking at the bigger picture,Liberation Day accelerates our Regime Change thesis,which has

6、been driven by heightened geopolitics,bigger fiscal deficits(now growing more in Germany and China),a messy energy transition,and stickier inflation.This is a new era where,as General David Petraeus has been saying,we have shifted from benign globalization to one of great power competition.For marke