US President Donald Trump’s recent tariff decisions have super-charged market volatility, leaving investors uncertain about the future. Trump has made multiple changes to tariffs in a short span of time, making it challenging for markets to adapt.
Trump recently announced new 25% tariffs on all US imports of steel and aluminium, adding to existing metals duties. However, his decision to suspend tariffs on Mexico and Canada hours before they were due to come into force sparked optimism among investors.
Economists warn that Trump’s tariff decisions may not prevent him from threatening them again, potentially leading to a trade war that could upend the global economic order. China, Brazil, Russia, and Iran are also intensifying efforts to weaken emerging nations’ reliance on the US dollar for trade, posing a growing challenge to dollar hegemony.
Investors are closely watching inflation data in the US, which is expected to show a 0.3% monthly increase in February. The monetary policy outlook remains uncertain, with the Federal Reserve paused easing last month and Trump’s tariff push beginning.
The Sino-US trade war is set to continue, with investors waiting for a conversation between Trump and Chinese President Xi Jinping. China is struggling to recover from its own economic problems, making it less appealing to investors who are avoiding the market.
Meanwhile, European markets are showing resilience, driven by cheap valuations, earnings growth, and momentum. However, the rally’s sustainability remains uncertain, with several potential catalysts for more gains.
Source: https://www.reuters.com/business/take-five/global-markets-themes-graphic-2025-02-07