Tue, 11 Mar 2025

Tue, 11 Mar 2025 Faisal Islam: Trump is no longer swayed by the stock markets

The assumption that the US president would row back on policies if shares fell no longer holds true.
A top US tech executive previously believed that any trade war with other countries would be short-lived, assuming President Trump's focus on market reaction. However, this assumption has changed as Trump gave an interview downplaying his reliance on market sentiment. In response to Canada imposing a 25% surcharge on US-bound electricity, Trump doubled tariffs against Canadian steel and aluminium. The White House is now communicating that the president has some tolerance for short-term economic pain, raising concerns about a recession. The Atlanta branch of the US Federal Reserve predicts a falling US economy in the first three months of the year. Uncertainty surrounding trade policies and potential government cuts threatens to cripple businesses. Private sector sentiment has also taken a hit due to tariff uncertainty. In Canada, a looming election suggests little incentive for compromise with Trump's "51st State" comments. The direction of travel is towards an escalating trade war, with new barriers on the European Union expected in three weeks based on "reciprocity". Other nations may try to add to inflation in the US to bring home consequences to consumers.
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