Trump Empowers US Economy Amid Global Shift

The close of the week saw European stock markets settle after a period of turbulence. The FTSE 100 index, which tracks the UK’s leading companies, exhibited good buoyancy, with Friday’s transactions culminating in a rise of 0.64%. France and Germany’s renowned indices, Cac 40 and Dax respectively, didn’t fare quite as well, descending slightly by 0.27% and 0.94% respectively.

Turning our gaze to the American economic panorama, we notice intrigue surrounding the public’s perception of the economic landscape. The highly-respected Pantheon Macroeconomics analysts noticed an alarming anxiety among consumers after studying the University of Michigan’s latest report. The report demonstrated a continued descent of consumer sentiment for four months running, showing an 11% fall from March and an accumulated slump of 30% since December.

The decline has been attributed to the various developments surrounding the trade war throughout the year. Given the crucial role consumer spending plays in keeping the American economy functioning, the current drop in confidence has stirred concerns whether it may foretell a similar plummet in actual buying behavior.

Meanwhile, reactions from the U.S.’s trading partners to President Trump’s tariff programs have left many wondering how close he might be to achieving his trade objectives. Let’s take a moment to review the current status of his five critical goals.

Elon Musk’s high-profile electric vehicle company Tesla has momentarily paused accepting new orders on some of its vehicle models in China. For reasons not explicitly stated, the U.S.-manufactured Model S and Model X are no longer available for purchase order, although, it is worth mentioning that these models represented a negligible less than 0.5% of the over 657,000 Tesla cars delivered last year.

Tesla, which boasts a production facility in Shanghai that manufactures Model 3 and model Y vehicles for the Chinese market and export purposes, is locked in fierce competition with China’s own native electric car companies, including BYD, in the electric vehicle market space.

Many are paying close attention to the U.S. dollar’s slump to its lowest level in three years. A common forecast among analysts is that American economic growth may be on the brink of a slow down. This, combined with the political turmoil and spiking interest rates demanded by investors in U.S. government securities due to tariffs, adds further uncertainty.

Elsewhere, in Warsaw, Poland, European Union finance ministers have been locked in intensive discussions about the profound impact that tariffs are having on the economy. The chairman of these meetings, Ireland’s Finance Minister Paschal Donohoe, has asserted that the EU seeks to leverage the 90-day delay on tariff application to instigate constructive dialogue with the U.S., and perhaps deduce a more amenable way forward.

Also from Warsaw, European Trade and Economy Commissioner Valdis Dombrovskis has intimated that the EU extends its willingness to cooperate with the U.S. to arrive at a mutually acceptable resolution. Warnings have been expressed by German Finance Minister Jörg Kukies that, should the negotiations fail to come to fruition, the EU will hold further discussions, and his Polish counterpart, Andrzej Domanski, has stressed that a unified European response will be required if the tariff negotiations reach an impasse.

At times, deciphering the current status of U.S. tariffs can seem like a convoluted task. However, we present you with an accessible synopsis. Trump recently escalated tariffs on Chinese goods, effectually pushing them up to 145% on selected items. This intensifying trade conflict aligns with the back-and-forth tariffs between the two nations, following Trump’s proclamation of extensive universal tariffs earlier.

While the stock markets experienced a volatile week, it was the performance of the U.S. bond market that reportedly piqued President Trump’s interest prior to his declaration of a 90-day pause on heightened tariffs. The implementation of tariffs has caused quite a stir in the U.S. bond market, fostering an environment where investors started selling off U.S. government debt.

The economic ambiguity and disarray within the global financial markets this week awarded the precious metal gold a historical high, as investors have scrambled to buy into it. The price for an ounce of gold skyrocketed to over $3,200 on Friday amidst the intensifying U.S.-China trade conflict. The Royal Mint, the UK coin producer, states that gold’s refuge status is a consequence of its innate value and remarkable historical importance.

The recent increases in tariffs between China and the US are speculated to have reached a point of indifference, as both countries’ import levies are so hefty they already disrupt much trade flow. Nonetheless, Chinese President Xi Jinping’s schedule brims with arrangements to meet with countries worldwide, as Beijing seeks new trade partnerships and strengthens opposition to Trump’s tariffs.

A deeper look into the detriment of President Trump’s tariffs on market performance reveals telling figures. The Hong Kong Stock Exchange’s Hang Seng Index fell by 8.5% for the week ending on Friday, marking the steepest weekly fall since February 2018. The Shanghai SSE Index also ended 3.1% lower for the current week. A stance from the U.S. is suggested as diversifying its trade partnerships, as explained by US Trade Representative Jamieson Greer, adding that a 90-day pause on heightened US tariffs, announced by Trump, is being optimally utilized to explore potential trade opportunities with other countries.