Trump’s Trade Turmoil Keeps Global Markets on Edge

Global Uncertainty Driven by Trump’s Tariff Policies

President Donald Trump’s aggressive trade tactics are creating widespread anxiety across global markets, according to Ed Yardeni of Yardeni Research. With ongoing tariff disputes and unpredictable policy shifts, investors, governments and businesses are bracing for the impact of what Yardeni calls a “New World Disorder”.

The US is currently negotiating new tariff agreements with 15 major economies—including Japan, South Korea, the EU and India—while 75 countries have shown interest in discussions. Stock markets worldwide have reacted nervously, particularly since "Liberation Day" on 2 April, when new tariffs took effect. A brief rally followed on 9 April after Trump paused his tariffs for 90 days for all countries except China.

Sweeping Tariffs Disrupt Trade

Trump’s trade measures include:

• 25% tariffs on steel, aluminium and imported vehicles, including specific car parts.
• Tariffs on goods from Canada and Mexico that don’t comply with the USMCA agreement.
• A potential temporary exemption for carmakers, hinted at by Trump on 14 April, to allow time to adjust supply chains.

These moves are reshaping global trade flows and causing uncertainty in key industries, particularly automotive and manufacturing.

Tech Sector in the Crosshairs

On 16 April, the US Commerce Department introduced strict new export controls on artificial intelligence chips, affecting major firms like Nvidia and AMD. Nvidia could lose up to $5.5 billion in earnings due to these restrictions, which will impact the wider tech industry and chip supply chains.

Trump’s Rift with the Fed

Tensions between Trump and Federal Reserve Chair Jerome Powell continue to unsettle markets. Trump has publicly criticised Powell’s refusal to cut interest rates, despite growing inflation concerns. He has even hinted that he would prefer Powell to resign before his term ends in May 2026. Powell, however, maintains that the tariffs themselves are contributing to inflationary risks and economic uncertainty.

US Economic Outlook Remains Unclear

The US economy is showing mixed signals:

• Retail sales are strong, but consumer confidence is declining.
• Industrial production fell in March, though manufacturing and mining output increased. These conflicting trends suggest potential risks of recession, particularly if trade tensions escalate further.

Earnings and Market Valuations Under Pressure

Analysts are now lowering earnings forecasts for S&P 500 companies for 2025 and 2026, citing fears of a recession. Meanwhile, Warren Buffett continues to sell equities, ending 2024 with a record amount of cash, signalling his caution about current market conditions.

Global Ripple Effects: China and Europe Respond

• China is attempting to boost domestic demand to cushion the impact of the trade war.
• Europe faces challenges from a rising euro, which could dampen export earnings and stoke deflationary risks.

Conclusion: Global Markets Face Prolonged Volatility

Trump’s unpredictable tariff policies and his tense relationship with the Federal Reserve are shaking investor confidence and fuelling global market instability. With tech, automotive and industrial sectors all feeling the strain, and geopolitical tensions rising, the world is entering a period of prolonged economic uncertainty. Businesses and investors will need to brace for volatility as the effects of this “New World Disorder” ripple across economies worldwide.

Source: (Investing.com)