Economic Report: Tariff Policies and Their Implications for Sustainable Development Goals

Executive Summary: Stagflation Risks and SDG 8

Recent economic analysis indicates that newly implemented trade tariffs pose a significant risk of stagflation—a combination of economic stagnation and high inflation. This scenario presents a direct challenge to the achievement of Sustainable Development Goal 8 (SDG 8), which promotes sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. The potential for slowing GDP growth alongside rising consumer prices threatens the economic stability necessary for progress on multiple development fronts.

Impact on Economic Growth and Decent Work (SDG 8)

The core tenets of SDG 8 are undermined by the potential economic fallout from the new tariff regime. Projections indicate a slowdown in U.S. GDP growth from 2.4% in 2024 to 1.5% in 2025. This economic deceleration is coupled with growing instability in the labor market.

Threats to Employment and Economic Stability

• Weakening Labor Market: Recent employment reports suggest the U.S. job market is faltering due to tariff-related uncertainty, jeopardizing the goal of full and productive employment.
• Corporate Cost-Cutting: Economists warn that businesses may respond to higher import costs by reducing their workforce or curbing wage growth, directly impacting the “decent work” component of SDG 8.
• Stagnation Concerns: The combination of a weaker job market and slowing growth points towards a “mild form of stagflation,” which fundamentally opposes the objective of sustained economic growth.

Inflationary Pressures and Their Effect on Poverty and Inequality (SDG 1 & SDG 10)

The tariffs are expected to fuel inflation, which has severe implications for SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities). As businesses pass the cost of import duties to consumers, the resulting price hikes disproportionately harm low-income households, increasing financial hardship and exacerbating economic disparities.

Analysis of Price Increases

• Record Tariff Rates: The effective average tariff rate has reached 18%, its highest level since 1934, creating a strong upward pressure on prices.
• Consumer Price Index (CPI): Inflation is forecast to rise, moving further away from the Federal Reserve’s 2% target and reversing a previous downward trend.
• Impact on Goods: Prices for essential and non-essential goods, including household supplies, furniture, and apparel, are already showing upward momentum, directly impacting household budgets and progress on poverty reduction.

Challenges to Industry and Global Partnerships (SDG 9 & SDG 17)

The economic strategy centered on tariffs creates significant hurdles for industrial development and international cooperation, affecting SDG 9 (Industry, Innovation, and Infrastructure) and SDG 17 (Partnerships for the Goals).

Sector-Specific and Global Disruptions

1. Industrial Impact (SDG 9): Tariff-sensitive industries such as manufacturing, retail, wholesale, and construction have reported fewer job gains or outright declines. Manufacturing, in particular, saw job losses for three consecutive months, undermining the goal of promoting inclusive and sustainable industrialization.
2. Erosion of Global Partnerships (SDG 17): The imposition of sweeping tariffs strains international trade relationships, moving away from the global partnerships required to achieve the SDGs. This policy creates an environment of uncertainty that discourages the stable, cooperative trade essential for global development.

The Monetary Policy Dilemma

The Federal Reserve faces a complex challenge that highlights the interconnectedness of the SDGs. The central bank must navigate a situation where policy tools for achieving different goals are in conflict.

• To combat inflation (addressing SDG 1 & 10), the Fed would typically raise interest rates, but this could further slow the economy and harm employment (undermining SDG 8).
• To support the weakening job market (addressing SDG 8), the Fed would typically cut rates, but this could exacerbate inflation (worsening conditions for SDG 1 & 10).

This policy conflict underscores the difficulty of maintaining a stable economic foundation, which is crucial for making progress across the entire 2030 Agenda for Sustainable Development.

SDGs Addressed in the Article

The article on the economic effects of tariffs and the risk of stagflation primarily addresses issues related to the following Sustainable Development Goals:

• SDG 8: Decent Work and Economic Growth – This is the most prominent SDG in the article. The text revolves around economic stagnation (low GDP growth), inflation, employment rates, job creation, and the overall health of the U.S. economy, which are central themes of SDG 8.
• SDG 10: Reduced Inequalities – The article touches upon this goal by mentioning how rising inflation and price spikes can disproportionately affect households. The phrase “financially hobbled many households” suggests that economic instability exacerbates financial disparities, impacting vulnerable populations more severely.
• SDG 17: Partnerships for the Goals – The core issue discussed, “sweeping new tariffs on U.S. trade partners,” directly relates to global trade policies and international economic cooperation. Tariffs are a measure that impacts the global trading system, a key concern of SDG 17.

Specific Targets Identified

Based on the article’s content, the following specific SDG targets can be identified:

1. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth. The article directly discusses the slowing of economic growth, stating, “U.S. GDP is also forecast to slow throughout 2025, with economists polled by FactSet pegging this year’s growth at 1.5%, down from 2.4% in 2024.” This highlights a failure to sustain growth.
   • Target 8.5: Achieve full and productive employment and decent work for all. The article expresses concern over the job market, referencing a “disappointing employment report,” a “weaker job market,” and the potential for businesses to “look at reducing your workforce.” It also notes that “Manufacturing jobs declined for three consecutive months,” which is a direct challenge to achieving full employment.

2. SDG 10: Reduced Inequalities

   • Target 10.2: Empower and promote the social, economic and political inclusion of all. The article implies a threat to this target by noting that the post-pandemic price spike “financially hobbled many households.” Rising inflation on essential goods, such as “Household supplies and furniture, apparel,” can disproportionately harm lower-income families, hindering their economic inclusion and stability.

3. SDG 17: Partnerships for the Goals

   • Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system. The article’s central topic of new tariffs directly contradicts this target. The implementation of “sweeping new tariffs on U.S. trade partners” and achieving an “effective average tariff rate” of “18%, the highest since 1934,” signifies a move away from an open and equitable trading system toward protectionism.

Implied Indicators for Measurement

The article mentions or implies several indicators that can be used to measure progress towards the identified targets:

• Annual growth rate of real GDP: The article explicitly provides figures for this indicator. It states that GDP growth is forecast to be “1.5%, down from 2.4% in 2024,” serving as a direct measure for Target 8.1.
• Inflation rate (Consumer Price Index – CPI): This is a key indicator mentioned throughout the article. It provides specific data points, such as an expected rise to “2.8% on an annual basis in July, inching higher from the 2.7% annual rate,” and references the “Federal Reserve’s goal of reaching a 2% annual rate.” This is used to measure price stability, which affects both economic growth (SDG 8) and inequality (SDG 10).
• Unemployment Rate / Job Creation Data: The article discusses the “disappointing employment report,” the slowing of job creation, and the Fed’s dual mandate to keep “unemployment low.” It also specifies that “Manufacturing jobs declined for three consecutive months,” which are all components used to measure progress toward Target 8.5.
• Average Tariff Rate: This is a direct indicator for Target 17.10. The article provides a precise figure: “the effective average tariff rate now stands at 18%,” which measures the level of trade restriction.

Summary of Findings

Source: cbsnews.com