US tariffs, immigration policies threaten economic stability

Dr Salman Ahmed, Global Head at Fidelity International, highlighted the far-reaching implications of US tariffs and immigration policies on the country’s economy in a podcast with Kamran Khan.

Ahmed noted that the US stock markets are increasingly isolated from global markets, describing this delinking as “unprecedented.” He stressed the importance of considering tariff policies and Federal Reserve strategies when predicting the dollar’s trajectory.

“The US-China decoupling is inevitable,” Ahmed stated, referencing the Biden administration's continuation of tariffs imposed in 2017-18. He explained that China’s long-term economic planning aims to reduce dependence on the US, raising concerns about the future of global trade dynamics.

Ahmed also warned of the severe economic impact of stricter immigration policies. “Under Trump’s first term, 1.5 million people were deported, and the Obama administration removed 2.9 million,” he said. He highlighted that many undocumented immigrants are integral to sectors like agriculture and construction, where they comprise 15% and 30% of the workforce, respectively.

“Deporting one million economically active immigrants annually could lead to a 5-6% rise in inflation and slow economic growth,” he cautioned. The costs of enforcement, along with the economic void created by such measures, could trigger severe shocks to the US economy.

Ahmed also touched on broader global issues, including BRICS nations' challenges in competing with the US dollar and Pakistan’s strategic position in a changing global landscape.

“Pakistan must integrate its economic and foreign policies to establish secure supply chains and benefit from regional partnerships,” he added.

Ahmed’s analysis underscores the interconnectedness of global economies and the need for careful navigation of trade, monetary policy, and immigration reform.