El-Erian Flags 4 Reasons Why It’s Impossible To Predict Trump Tariff Fallout

Noted economist Mohamed El-Erian said on Friday that it’s far too soon to draw firm conclusions about the economic fallout from the latest U.S. tariff moves. 

In a post on X, the economist outlined four major reasons why analysts are struggling to assess how new duties will affect countries, industries, and global markets: a volatile and unpredictable tariff regime, fluid international negotiations, uncertain government and corporate responses, and the unresolved question of who ultimately bears the cost. 

U.S. markets were struggling in morning trade on Friday as President Donald Trump’s tariff deadline expired, and trading partners were hit with tariffs going up to 41%. The SPDR S&P 500 ETF (SPY) fell over 1.7% and the SPDR Dow Jones Industrial Average ETF (DIA) slid as much as 1.5%. The Invesco QQQ Trust (QQQ) was the worst hit, dropping more than 2%. 

It didn’t help that the jobs report showed slowing job growth, and previous estimates were also revised lower. On Stocktwits, retail sentiment around SPY dipped to ‘bullish’ from ‘extremely bullish’ territory over the past day. Meanwhile, retail sentiment around DIA remained in the ‘bullish’ zone. 

El-Erian noted that the global economy has left behind an era of steadily falling tariffs and entered one defined by rising and uneven tariffs.

“What is clear, however, is that the global economy has departed from its multi-decade trajectory of converging towards lower and more consistent tariffs worldwide. We now find ourselves in an environment characterized by higher, less uniform, and more volatile tariffs,” he wrote.

On Thursday, the White House issued an executive order raising tariffs on dozens of key trading partners. Under the new policy, 68 countries and the 27-member European Union will face a default 10% tariff. However, countries with trade deficits with the U.S. will face a minimum 15% tariff, affecting about 40 nations. 

The executive order said he was acting because “large and persistent annual U.S. goods trade deficits constitute an unusual and extraordinary threat to the national security and economy of the United States.”

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