On July 10, National Business Daily (NBD) was invited to attend a media briefing with Rob Subbaraman, Head of Global Macro Research & Co-Head of Global Markets Research at Nomura.

During the meeting, Subbaraman shared his views on hot topics such as the outlook for the global economy in the second half of 2025 and the potential impact of a Trump administration's domestic and foreign policies.

Rob Subbaraman, Head of Global Macro Research Photo/provided to NBD

Question: U.S. president Donald Trump has already sent more than 20 letters. but most of the countries whose reserve the letters are emerging markets. And some of them don't have a trade deficit with the U.S. So why are they chosen to choose to receive the letters?

Subbarama: I think what we have that the Trump administration is using tariffs, not just to reduce the U.S. trade deficit, but for a bunch of other reasons as well. Some of the reasons are to do with foreign policy and some are just for geopolitical reasons, as we have seen just very recently with the 50% tariffs on Brazil. 

Question: How would you assess the long term impact of Trump's trade policy?

Subbarama: We know that there was a big surge in U.S. imports in the first quarter. It seems like us firms front-loaded their imports in order to buy as much other things as they could at the lower tariff rate. So they have very high inventories. They can run down that inventory for a while.

But once it's run down, they'll have to start replenish, and then they'll have to start to buy imports. We think it is a matter of time before the tariffs are start to affect firms and the firms will pass on quite a bit of the cost to the consumer. 

Overall, we do think inflation will pick up as to the tariff policies.

I think we will start to see more evidence that the tariffs are affecting the economic data in the U.S.

We Believe that there is going to be more signs of stagflation pressures. So inflation going up and growth slowing in the second half of the year. And because of inflation going up, we think the Fed is gonna be very cautious and not cutting rates till December.

Question: On July 3rd, the US House of Representatives passed the One Big, Beautiful Bill Act. Some argue that this bill may further increase the us fiscal deficit ratio. Do you agree? How do you see the impact of this bill on the U.S. macro economy?

Subbarama: This is a very big part of the the addition to the budget deficits. It's (going to add) over $3 trillion to the budget deficits over the next 10 years. That's 340 billion per year. 

It's unusual to have fiscal stimulus when the unemployment rate is still so low. But in the U.S., the budget deficit is looking like it's gonna remain well above 6% of GDP in the coming years. With this large budget deficits already public debt at around 100% of GDP, It is unsustainable. It is gonna mean higher interest payments.

The ultimately fundamentally the choices for the U.S. is that they have to address here is either they choose the trade, the budget deficits, and that means cutting, spending or raising taxes or raising new revenues.

Or they can get the Fed to do more quantitative easing again and buying treasuries. A lot of those factors could lead to inflation. So this is a risk.