Economic Outlook Report: Tariff Impacts on Sustainable Development Goals
Executive Summary: Macroeconomic Forecasts and SDG 8
An analysis of the third-quarter economic outlook by Morningstar indicates that tariff policies are projected to negatively impact key economic indicators, thereby posing challenges to the achievement of Sustainable Development Goal 8 (Decent Work and Economic Growth). While a recession is not anticipated, the forecasts reveal a trend of slowing growth and rising inflation, which directly affects the goal of sustained and inclusive economic development.
- Gross Domestic Product (GDP) Growth: Forecasts show a deceleration from 6% in 2021 to a projected 1.7% in 2025, further declining to 1.1% in 2026. This slowdown is a direct challenge to SDG 8, which promotes sustained economic growth.
- Inflation Rate: Inflation is expected to be 2.7% in 2025 and rise to 3.2% in 2026. This trend contrasts with the Federal Reserve’s 2% target and can erode economic stability.
- Monetary Policy: Substantial monetary policy loosening is expected, with multiple interest rate cuts anticipated through 2027 to counteract the economic slowdown.
Tariff Impact Analysis: Supply, Demand, and Economic Efficiency
According to Preston Caldwell, Morningstar’s chief U.S. economist, tariffs introduce significant shocks to both supply and demand, undermining economic efficiency and contributing to a decline in GDP. This disruption affects the stable economic environment necessary for progress on multiple SDGs.
- Supply Shock: Tariffs create a drag on economic efficiency by disrupting established supply chains and increasing the cost of imported goods. This runs counter to the principles of efficient resource use promoted within the SDG framework.
- Demand Shock: The implementation of tariffs leads to fiscal contraction and heightened economic uncertainty, which can dampen consumer and business confidence, thereby reducing overall demand.
Socio-Economic Consequences for SDG 1 and SDG 10
The economic effects of tariffs extend beyond macroeconomic figures, with significant implications for social equity goals. The pass-through of tariff costs to consumers is expected to disproportionately affect vulnerable populations, hindering progress on goals related to poverty and inequality.
- SDG 1 (No Poverty): The forecast indicates that U.S. importing firms, currently absorbing tariff costs, will eventually pass them on to consumers. The resulting increase in the price of goods can raise the cost of living, placing additional strain on low-income households and impeding efforts to eradicate poverty.
- SDG 10 (Reduced Inequalities): As the burden of tariffs shifts to consumers, it functions as a regressive tax. This can exacerbate income inequality by consuming a larger portion of disposable income from those in lower economic strata compared to wealthier individuals.
Global Trade, Market Volatility, and SDG 17
The report highlights anticipated market volatility stemming from trade negotiations and slowing economic growth. This environment of uncertainty challenges the spirit of international cooperation essential for achieving the 2030 Agenda.
- SDG 17 (Partnerships for the Goals): Tariffs represent a move away from the global cooperation and open trade systems that SDG 17 advocates for. The resulting trade frictions and market instability can undermine the partnerships required to address global challenges and finance sustainable development initiatives.
- Market Stability: According to Dave Sekera, Morningstar’s chief U.S. market strategist, significant market volatility is expected. Such instability can deter the long-term private sector investment crucial for advancing sustainable infrastructure, innovation, and other SDG-related priorities.
1. Which SDGs are addressed or connected to the issues highlighted in the article?
SDG 8: Decent Work and Economic Growth
- The article is fundamentally about economic performance, directly aligning with SDG 8. It discusses key economic metrics such as Gross Domestic Product (GDP) growth, inflation, and economic efficiency, all of which are central to this goal. The analysis of how tariffs impact these metrics (“push gross domestic product forecasts downward while increasing inflation”) is a core concern of SDG 8.
SDG 10: Reduced Inequalities
- The article’s focus on tariffs connects to SDG 10, which addresses policies affecting international trade. Tariffs are a trade policy instrument that can create or exacerbate inequalities between trading nations. The article mentions that “U.S. importing firms are paying for most of the tariffs,” which has implications for both domestic and international economic actors.
SDG 17: Partnerships for the Goals
- This goal emphasizes the need for a stable global economic environment and a “universal, rules-based, open, non-discriminatory and equitable multilateral trading system.” The article’s discussion of tariffs, their impact on trade (“surge in imports… to beat the tariffs”), and “trade negotiations” directly relates to the health and fairness of the global trading system, a key component of SDG 17.
2. What specific targets under those SDGs can be identified based on the article’s content?
Target 8.1: Sustain per capita economic growth
- The article directly addresses this target by providing specific forecasts for economic growth. It states, “Caldwell predicted GDP for 2025 will grow by 1.7% and dip to 1.1% growth in 2026.” This analysis of GDP trends is a direct engagement with the objective of sustaining economic growth.
Target 8.2: Achieve higher levels of economic productivity and efficiency
- This target is relevant as the article explains how tariffs negatively affect economic efficiency. It notes, “From the supply side, tariffs put a drag on economic efficiency.” This highlights a direct conflict with the goal of improving productivity.
Target 10.a: Implement the principle of special and differential treatment for developing countries… in accordance with World Trade Organization agreements
- The article’s subject is tariffs, a key instrument in international trade policy. The imposition of tariffs, as discussed, is a move away from the principles of open and free trade that are foundational to WTO agreements and the special considerations for developing countries mentioned in this target.
Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system
- The discussion of tariffs represents a challenge to this target. Tariffs are trade barriers that can be discriminatory and move away from an open trading system. The mention of “trade negotiations” also points to the ongoing efforts and challenges in maintaining the system this target aims to promote.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
Indicator 8.1.1: Annual growth rate of real GDP per capita
- The article explicitly provides data for this indicator. It presents forecasts for GDP growth: “GDP for 2025 will grow by 1.7% and dip to 1.1% growth in 2026. In comparison, GDP growth for 2021 was 6%.” These figures are direct measurements used for this indicator.
Indicator 10.a.1: Proportion of tariff lines applied to imports from least developed countries and developing countries with zero-tariff
- While not providing a specific percentage, the entire article is about the economic consequences of applying tariffs to imports. The statement about a “surge in imports… to beat the tariffs” directly references the existence and impact of these tariffs, which this indicator is designed to measure.
Implied Indicator: Annual inflation rate
- The article heavily focuses on inflation as a key economic outcome. It provides specific figures: “Inflation is expected to be 2.7% in 2025 and rise to 3.2% for 2026, compared to a high of 6.6% in 2022.” While inflation is part of the broader context for Indicator 8.1.1 (real GDP), its prominence in the article as a measure of economic stability makes it a key implied indicator for assessing progress toward a stable economic environment under SDG 8.
4. Table of SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth |
8.1: Sustain per capita economic growth.
8.2: Achieve higher levels of economic productivity and efficiency. |
8.1.1: Annual growth rate of real GDP per capita (Explicitly mentioned with figures like “1.7% growth in 2025”).
Implied: Annual inflation rate (Mentioned with figures like “2.7% in 2025”). |
| SDG 10: Reduced Inequalities | 10.a: Implement the principle of special and differential treatment for developing countries… in accordance with World Trade Organization agreements. | 10.a.1: Proportion of tariff lines applied to imports (The article’s entire premise is the application of tariffs on imports). |
| SDG 17: Partnerships for the Goals | 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system. | Implied: Worldwide weighted tariff-average (The discussion of imposing tariffs and their economic impact directly relates to this indicator). |
Source: insurancenewsnet.com
