Fears of a US recession have hit global markets hard this week.
The Australian stock market took a sharp dive, losing billions, as concerns grew over the US economy.
Economists are increasingly warning of a “Trumpcession,” with the US president’s unpredictable trade policies playing a major role.
Australia’s economy is closely tied to the US, and a slowdown in the world’s largest economy will likely impact us too.
So, can we avoid a “Trumpcession”?
In this episode of The Briefing, we talked to Scott Phillips, Chief Investment Officer at The Motley Fool, who explained how the situation could play out.
Donald Trump recently commented that the US could be heading for a “period of transition,” as his tariffs continue to rattle global investors.
“We’re going to take in hundreds of billions of dollars in tariffs, and we’re going to become so rich, you’re not going to know where to spend all that money,” Trump told reporters while flying from Florida to Washington DC.
Phillips said a “Trumpcession” is in full force, “whether we like it or not.”
“If the US has a recession… We have less demand for Australian products by Americans, but also indirectly they’ll buy less from China, less from Europe. Europe buys less from us. It’ll have a cooling effect on the overall economy,” Phillips said.
He also pointed to how Trump’s tariffs could specifically hurt Australian exports like steel and aluminium.
“It makes it less likely we can sell aluminium and steel to the US, and everyone’s going to be in the same boat.”
While Australia may find new markets for some goods, others could struggle, as seen with wine exports to China.
As the US economy faces uncertainty, experts warn that the impact will likely be felt here in Australia, with a potential knock-on effect for local businesses and the stock market.
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