Here's when a top economist says the US will see the most damage from Trump's tariffs

Apollo’s chief economist says the most damage from Donald Trump’s trade war will be felt in the economy sometime around the end of the year.

Torsten Sløk said he thinks that the sweeping tariffs the president announced this year will push prices higher until inflation reaches a peak in November or December.

Speaking to Bloomberg this week, Sløk pointed to consensus inflation expectations, which show inflation rising through the last two months of the year.

Inflation, meanwhile, is already starting to “lift-off” in consumer goods, he said. The latest consumer price index report showed that prices for durables grew 0.7% year-over-year in June, the second-straight month of growth after more than two years of annualized declines. The headline number also drifted higher, hitting 2.7%, from 2.4% in May.

Services inflation, which accounts for 60% of the CPI, will likely take off soon as well, Sløk said. He pointed to the impact of Trump’s mass deportations on wage growth, which raises employment costs for businesses and can cause prices to rise as well.

“They need to wait to see the peak. And we have really only had the take-off stage,” he said of the Fed and inflation

Hotter inflation spells bad news on two fronts, Sløk said:

• The Fed is unlikely to cut interest rates. Central bankers will want to assess the peak damage from Trump’s tariffs before loosening monetary policy more meaningfully, he said.
• It could be the start of a stagflation shock. In a previous note to clients, Sløk said he believed the US was already beginning to see a stagflation shock, a situation where inflation rises while economic growth slows. Economists have described stagflation as one of the worst-case scenarios for the economy, as the Fed can’t cut rates to boost economic growth without fanning inflation.

Stagflation could cause GDP growth in 2025 could more than halve from its peak last year, Sløk estimated in a recent whitepaper. Inflation could also remain around 3% throughout 2025, while the unemployment rate could rise over the next two years, he predicted, based on where tariffs stood in June.