Global Monthly - Buckle up – this is just the beginning
The early days of the Trump administration have been predictably chaotic. Businesses and investors had better get used to the new environment of radical policy uncertainty. An earlier end to Fed rate cuts is likely to drive the euro below parity later this year. This will take the edge off of the tariff blow to European exports, but it won’t fully offset it. Still, Europe isn’t powerless: the EU has long prepared for negotiations with Trump, while the German election could free up much-needed investment to deal with structural competitiveness challenges. We preview the German elections in the first of a series of articles in this month’s Spotlight*. Regional updates: The consumer is finally waking up in the Eurozone, helped by ECB rate cuts, while in the Netherlands, stronger domestic demand is likely to partly offset looming headwinds for trade. In the US, the goldilocks economy is back for now, but Trump policies will likely put an end to Fed cuts. China is seeing tailwinds from Beijing’s policy pivot and trade frontloading, ahead of likely US tariffs.
