Larry Fink, chief executive of BlackRock, the world’s largest asset manager, said the US faces the risk of tipping into a brief recession in the coming months, after its president, Donald Trump, unleashed a range of tariffs on the world this week.
However, he said in an interview with The Irish Times in Dublin on Thursday that the new administration’s policy of cutting government costs and red tape would boost growth over the longer term.
The possibility of a downturn in the US is “not insignificant” in the next few months, said Mr Fink, who has led the growth of BlackRock into an institution with $11.6 trillion (€10.5 trillion) of assets under management since he co-founded it in 1988.
“At the same time, as the president’s policies kick in in relation to deregulation and streamlining permitting [for various projects], we could see a real growth agenda that offsets some of the recessionary short-term pressures,” he added.
The US president outlined on Wednesday a raft of tariffs being phased in over the next week, including a baseline charge of 10 per cent on imports, rising to 20 per cent for the EU, 30 per cent on China and 46 per cent on Vietnam.
Stock market indices across Asia, Europe and Wall Street fell on Thursday – wiping $1.7 trillion off the value of companies listed on the S&P 500 index by midday in the US alone – as investors digested the sweeping tariff announcements and potential for retaliation.
Gold, seen as a safe haven in times of turbulence, reached a fresh record of almost $3,168 an ounce. US government bond yields – or market interest rates – also fell as investors bet the US Federal Reserve will accelerate interest rate cuts this year to prop up the economy. Yields on European government bonds also dipped.
Mr Fink said a US trade war with Europe and other trading partners does not need to follow, as Mr Trump is merely seeking to reciprocate part of what other countries are imposing on imports from the US. He added that Europe must work now to become more competitive.
“There does not need to be a true trade war,” he said. “The question is: is there any validity to what the US is doing and saying? Should we have more symmetry in our trading agreements? That’s all. That’s what the reasoning is.”
When asked if he agreed with Mr Trump’s approach, he answered: “It’s not for me to agree. But I understand the logic behind it.”
Mr Trump said that the new tariffs were “approximately half” of what its trading partners “have been charging us”. That halved figure includes “the combined rate of all their tariffs, non-monetary barriers and other forms of cheating,” he added.
Ireland’s pharmaceutical sector which accounts for 60 per cent of exports from the State to the US, has so far avoided the new EU duty. However, Tánaiste Simon Harris said in the Dáil on Thursday that “we shouldn’t fool ourselves that there aren’t further plans in relation to sector specific measures, including pharma”.
The EU is “preparing for further countermeasures” to protect its interest, but focused, for now, on trying to negotiate with the Trump administration, European Commission president Ursula von der Leyen said.
Taoiseach Micheál Martin said Ireland said: “It is important that our response is considered and measured. Any action should be proportionate, aimed at defending the interests of our businesses, workers and citizens.”
“A confrontation is in no one’s interests,” he added.
