The global economy has been on shaky ground since Donald Trump announced a new wave of tariffs on US trading partners, including Canada, Brazil, India, and Taiwan. Despite the chaos, the stock market remains relatively close to record levels.
While some argue that things could have been worse, the reality is that consumers worldwide will pay a heavy price for these tariffs. The latest escalation has triggered warnings about untold economic damage, but the US economy has shown surprising resilience in recent months.
The administration’s decision to fire the official in charge of labor market data and its war on the independence of the US Federal Reserve has raised concerns about further economic instability. However, investors still anticipate that deals will be made to mitigate the worst effects.
Many countries have not retaliated with tariffs, which has helped to avoid a deeper trade war. Businesses have been preparing for the worst-case scenarios by stockpiling goods and increasing prices across international markets.
However, signs of consequences are emerging. As US businesses exhaust their pre-tariff stockpiles, prices will creep higher. The uncertainty surrounding Trump’s leadership is hitting jobs and investment, with last week’s US jobs market data reigniting fears about the economy’s resilience.
The GDP growth rate of 3% may seem robust, but it was heavily influenced by a distorted activity in the first quarter. The investor view is that deals will be made to avoid the worst threats, but significant damage is still being done.
Source: https://www.theguardian.com/us-news/2025/aug/03/despite-trump-the-us-economy-remains-surprisingly-resilient-but-for-how-long