UBS Economics-Global Economics Strategy _The Compendium- the 10 (+1) tou...-114064344

ab13 March 2025Global ResearchGlobal Economics & StrategyThe Compendium- the 10 (+1) toughest client questions we've fieldedUsing our frameworks to answer the toughest investor questions In this note, Team UBS tackles the most difficult questions we have received from investors. Short one-page answers are used, with a few charts to make the case. A summary of the highlights can be found on pages 2-3. We usually present 10 questions but have added an additional 'bonus' question. The 10 questions are: 1) What is the economic impact of Trump’s tariff proposals? 2) Are tariffs priced in markets? 3) Is DOGE able to move the fiscal needle? 4) How much stimulus has China announced, and is it enough? 5) Could currencies (a mini Plaza) be part of a tariff deal? 6) Is Europe’s economy turning up or down?7) What is the impact of DeepSeek now that the dust has settled? 8) What are the market implications of a potential Ukraine peace deal? 9) How much can ‘animal spirits’ boost US growth? 10) US, Europe or EM equities?Bonus question: 11) How expansionary is European fiscal policy turning?This report has been prepared by UBS AG London Branch. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 27. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.EconomicsGlobalArend KapteynEconomist arend.kapteyn@ubs.com +44-20-7567 0531Bhanu BawejaStrategist bhanu.baweja@ubs.com +44-20-7568 6833Jonathan PingleEconomist jonathan.pingle@ubs.com +1-212-713 2225Reinhard CluseEconomist reinhard.cluse@ubs.com +44-20-7568 6722Andrew GarthwaiteStrategist andrew.garthwaite@ubs.com +44-20-7567 4343Shahab JalinoosStrategist shahab.jalinoos@ubs.com +1-212-882-5532Pierre LafourcadeEconomist pierre.lafourcade@ubs.com +1-212-713 4543Ning ZhangEconomist ning.zhang@ubs.com +852-2971 8135Abigail WattEconomist abigail.watt@ubs.com +44-20-7567 1062Nicolas Le RouxStrategist nicolas.le-roux@ubs.com +33-14-888 5000Felix HuefnerEconomist felix.huefner@ubs.com +49-69-1369 8280Gerry FowlerStrategist gerry.fowler@ubs.com +44-20-7567 5490 Global Economics & Strategy 13 March 2025ab 2Global Economics & StrategyUBS ResearchSUMMARY1) What is the economic impact of Trump’s tariff proposals? The US has proposed at least $770bn in tariffs, 7x more than implemented in 2018/2019. In this first essay, we offer a menu of potential tariff impacts (currency, growth, inflation, real imports) for a 10% bilateral tariff. The impact numbers can be scaled up to any tariff size, and we offer 8 alternative ways of modelling the tariff so clients can choose their preferred specification. Takeaways: 1. Growth/inflation deltas for Canada/Mexico are much larger than for China