Trade tensions mount as oil prices plunge below $60 per barrel

On Sunday, oil prices dropped below $60 per barrel. This decline is linked to changes in US trade policy by President Donald Trump. For several days, discussions have been ongoing about the negative implications for the economy, potentially leading to a recession both in the US and globally.

West Texas Intermediate (WTI) crude futures fell by over 3% to $59.78, marking the lowest since April 2021. This drop follows a series of 6% reductions last week, and the newly announced tariffs, as explained by CNBC, have raised additional concerns that increased business costs could lead to an economic slowdown.

According to JPMorgan, the new tariffs could push the United States and the world into a recession as soon as 2025. The bank currently estimates the US recession risk at 60%, up from 40%. Mohamed El-Erian, chief economic advisor at Allianz, assesses the recession risk in the United States at 50%. In his opinion, markets still underestimate the impact of Trump's aggressive trade policy on inflation. Increasing production costs due to the new tariffs may limit oil demand, keeping commodity prices low.

On April 2, Donald Trump announced drastic tariffs on almost the world: 10% on all imports and 25% on foreign cars. He presented a list of countries and the tariff rates that would apply to them. General tariffs took effect on April 5, and additional tariffs for specific countries will take effect on April 9.

American tariffs on the EU will reach 20%. This is less than the new tariffs Trump intends to impose on China, which will be as high as 34%, but more than retaliatory tariffs aimed, for example, at Brazil, which will reach 10%.

During a conference in front of the White House, the US President argued that these will be "nice tariffs," not as high as those imposed on the USA by other countries. He claimed that this trade policy would make America wealthy again.