The 2025 outlook is shrouded in uncertainty as the incoming Trump administration’s policy agenda takes shape. The president-elect’s big plans in areas like trade policy, fiscal policy, and immigration are expected to create complex crosscurrents for the economy.
The US economy was stable last year, with growth continuing, a solid job market, and cooling inflation. However, 2025 looks promising but challenging due to internal contradictions within Trumpism that must be resolved.
Key areas of uncertainty include tariffs, budget deficits, and immigration policies. New tariffs could disrupt global supply chains and impact inflation. The administration’s approach on cutting the deficit and reducing taxes will also shape interest rates.
A tighter border security focus may lead to slower GDP growth and disruptions in industries reliant on immigrant labor. Trump’s policy agenda is expected to be influenced by various factions, including his own administration, business leaders, and Republican lawmakers.
The economy has significant momentum, driven by deregulation, which could fuel further growth. However, the Federal Reserve’s reluctance to cut interest rates due to resilient growth and high inflation adds to uncertainty. The global economy is already slowing in some US allies and adversaries.
Central bankers are uncertain about future interest rate cuts, given still-simmering inflationary pressures. Far-right populists in Europe are gaining power, stoking chaos that may lead to higher interest rates. China faces the harshest tariff threats, with other countries threatening to impose tariffs on clean energy products. The global economy is showing cracks that Trump’s policies could widen, potentially impacting financial markets and trade patterns.
Source: https://www.axios.com/2025/01/02/trump-policy-musk-tariffs-borders