In its baseline scenario, Robeco expects US growth to slow next year due to cooling consumption and higher tariffs.

In its economic outlook for 2025 “This is not a landing”the firm forecasts real GDP growth of 1.7 percent, reflecting a slight stagflationary trend.

Moreover, easing credit conditions and strengthening fiscal momentum in Europe will support a modest cyclical recovery, while in China stimulus efforts are expected to offset some downside risks without reversing disinflationary pressures.

But in its bearish scenario, Robeco projects a "turbulent environment in which escalating tariffs, geopolitical tensions and high military spending lead to global stagflationary pressures."

What's more, inflation is likely to soar and disrupt bond markets and corporate investment, with U.S. consumers bearing the brunt of rising tariff costs.

“Here it is [in this scenario] we are indeed seeing a negative supply-side shock reverberating through the global economy amid a fairly vicious blue-collar trade war, Peter van der Wele, multi-asset strategist at Robeco, said during a webinar.

He also warned of an increasingly fragmented global economic landscape.

"There are currently 59 state-led conflicts in the world, and this scenario foresees an additional number of conflicts also in the hybrid sphere unfolding over the next 12 months," he said.

Despite concerns over the potential "volatile nature" of Donald Trump's presidency, he expects the US economy to achieve healthy GDP growth of 1.7 percent in 2025.

That growth is likely to translate into high single-digit earnings per share (EPS) growth, albeit slightly below current levels of 40 percent.

Van der Welle also said liquidity conditions could ease in the first half of 2025. due to central bank easing.

"But things could become more challenging in the second half if Trump does become more vocal about tariffs," van der Wele said.

Recalling Trump's first term, van der Welle said the initial optimism from Tax Cuts and Jobs Act of 2017 (TCJA) yielded to market headwinds in 2018 as tariff policies became a central focus.

"Initially in December 2017 [we saw] the steep upward trajectory of bonds for EPS revisions, but every time Trump became more vocal about his tariff policies in 2018, you saw a number of earnings declines vs. earnings increases, and risk assets experienced more headwinds after each tariff announcement of Trump," he said.

"We're in a late-cycle market, so that means there may be more multiple compression, but earnings delivery will again be fairly stable so US corporates can grow to their multiples."

He also said the unemployment rate will be a critical indicator of market narratives in 2025.

"When unemployment is about to rise above 4.5 percent, that will change the rules for 2025 than we can see a shift in the market narrative to the hard landing narrative again," van der Wele said.

Consequences of the financial market

Robeco said that while U.S. stocks are expected to maintain their upward trajectory, with the S&P 500 reflecting expanded estimates after a year of strong performance, macroeconomic uncertainty could lead to sharp swings in sentiment.

He said elevated valuations, particularly in the technology sector, make a selloff more likely.

"We've done an analysis looking at bubbles historically and the current levels do create higher moments of low pressure, so that means the probability of a selloff is elevated, especially in the US sector, but also the degree of selloff is higher " van der Welle said.

"You basically have a 30 percent probability of a sell-off -- and any sell-off, assuming it happens, can lead to a 30 percent market decline in the tech sector."

"It's something to consider that the bullish narrative in tech, because of the adoption of AI, could continue, but at the same time you have to have your bullish bets because the downside risk is quite high."