The Trump administration’s shifting trade policies and tariff threats continue to cloud global markets. Ongoing uncertainty in negotiations with allies and China is dampening confidence in the U.S. economy.
Trade Talks in Limbo: Despite claiming progress with Japan, no clear concessions have been outlined. Reports suggest the U.S. is pressuring allies to limit trade with China as part of a broader anti-Beijing campaign. Meanwhile, U.S.–China talks remain frozen amid mutual frustration. A proposed new U.S. plan could impose fees on Chinese-owned ships at American ports, functioning as de facto tariffs.
Trump remains hopeful about a deal with the EU but shows no urgency. Sources say the EU is ready to retaliate if talks fail.
Tariffs Take a Toll: Although a 90-day pause is in place for some tariffs, sector-specific duties and a 145% tariff on Chinese goods are driving up costs. March retail sales rose 1.4%, largely due to higher auto prices. Businesses warn of rising input costs and possible inflation, increasing concerns of stagflation.
Fed Focused on Inflation: Fed Chair Jerome Powell reaffirmed the central bank’s commitment to price stability, hinting at caution over rate cuts despite market expectations. The Fed may update forecasts in June to reflect higher inflation and slower growth. Duhani Capital expects only 1–2 rate cuts this year, depending on inflation trends.
Political Tensions Rise: Trump criticized Powell and hinted at removing him, which could shake market confidence and Fed independence.
Market Moves:
- Dollar fell 0.65%
- S&P 500 dropped 1.5%, Nasdaq 2.3%
- Gold surged 5% last week, up 27% YTD
- Safe-haven flows to yen and franc remain strong
Investor sentiment remains cautious as markets brace for further trade and policy developments.