US tariff hike hits 115-year high, raising global recession fears: Fitch

The latest wave of U.S. tariff hikes has sent effective tariff rates soaring to levels not seen since 1909, threatening to derail global growth and limit the Federal Reserve’s ability to ease interest rates, Fitch Ratings said in a statement Tuesday.

Dubbed “Liberation Day” by the U.S. administration, the sweeping tariff increases announced on April 2 raise the floor for import duties to a minimum of 10% for all trading partners, with sharply higher rates for 57 countries, including top exporters in Asia and the European Union.

The effective tariff rate (ETR) for Chinese goods will jump to 64%, while imports from the EU will face a 20% tariff. Vietnam, Thailand, Taiwan, India, South Korea, Malaysia, and Japan will also see new rates ranging from 24% to 46%.

Overall, Fitch estimates that the U.S. average ETR will climb to around 25% — well above the 18% forecasted in March and marking the highest level in more than a century.

The ratings agency cautioned that U.S. growth in 2025 is now likely to undershoot its earlier forecast of 1.7%, as the tariffs feed into higher consumer prices and reduced corporate profits. “Tariff hikes will result in higher consumer prices and lower corporate profits in the U.S.,” Fitch said, noting that real wages are likely to shrink, weighing heavily on consumer spending and business investment.

The timing of the hikes also coincides with signs of cooling sentiment among American consumers. Growth in spending slowed in early 2025, and recent volatility in equity markets has added to concerns.

With inflation expectations among U.S. households rising, the Fed may be forced to delay any further rate cuts, Fitch warned, noting that “the impact of higher prices from tariffs will likely outweigh any gains U.S. firms may see from reduced foreign competition.”

Globally, the new tariffs could disrupt supply chains and depress economic prospects, especially in export-reliant Asian economies. While countries in Latin America may experience limited benefits through trade diversion, Fitch said the sheer breadth of the tariff hikes curtails most positive spillovers.

Some countries may respond with monetary and fiscal policy support, or seek bilateral tariff relief through negotiations. However, the risk of retaliatory measures remains high and could escalate trade tensions further, potentially prompting the U.S. to raise tariffs again.

Fitch also warned that the full economic and credit impact on individual sovereigns is still unclear. However, countries with high value-added exports to the U.S. as a share of GDP could face rating pressure, depending on how well they respond to the trade shock.

“The influence of tariffs on growth prospects and public finances, which is likely to be shaped by policy responses, will be a key factor in our sovereign rating assessments,” the agency said.