1、Flash Macro UpdateTARIFFS 2.0|April 2025Henry H.McVeyHead of Global Macro,Balance Sheet&Risk,CIO of KKRs Balance SDave McNellisCo-Head of Global Macro&Asset AllocationAidan CorcoranCo-Head of Global Macro&Asset AllocationChangchun HuaManaging Director,Global MacroBrian LeungRichard BullockEzra MaxMi

2、guel MontoyaBola OkunadeAsim AliAllen LiuWhat You Need to KnowWhat is our latest thinking on tariffs,the global economy,and markets?While we expect the tariff negotiations to remain fluid,our base case is that we now envision a steady state,with a 10%base rate across many countries,as well as flexib

3、le reciprocal tariffs and select sector-specific levies across autos,steel,semiconductors,pharmaceuticals,and critical minerals.All told,these considerations take our average aggregate tariff assumption up to 18%(with the severity of Chinas tariffs pushing the average higher).Our base case now has G

4、DP growth in the U.S.running at 0.5-1.5%,compared to our quantitative GDP model of 2.9%(which does not include tariffs).DOGE likely drags down growth by 60 basis points,while tariffs reduce growth by 1.5-2.0%.As offsets to these headwinds,however,we do expect the Trump administration to push extreme

5、ly hard on both tax reform and further deregulation in the near-term.Importantly,with President Trump pursuing fiscal consolidation,the positive fiscal baton is now being handed from the U.S.to Europe and Asia.Specifically,as we detail below in Exhibit 6,more fiscal stimulus in Germany and China is

6、coming at a time when the U.S.after being the lead spender immediately during and after COVID is now embarking on fiscal tightening.For investors,this relative regional differential represents a notable reversal since 2020.On trade negotiations,an approach that we think both executives and investors