Impact of Donald Trump’s Potential Presidency on Global Markets

Donald Trump’s anticipated return to the U.S. presidency could have significant effects on global markets, particularly through new tariff policies expected in early 2025.

Tariffs and Inflation

Analysts forecast a 60% tariff on Chinese imports, along with 10-20% levies on other trading partners. This will likely add inflationary pressures and impede investment growth.

U.S. Economic Forecast

U.S. GDP growth is projected to relax to 2.2% in 2025, down from 2.8% this year. The Federal Reserve is likely to curtail rate cuts after March, maintaining the upper limit at 4.25% by year-end. Despite potential tariff impacts, strong economic fundamentals from resilient private-sector balance sheets and supportive financial conditions may mitigate these effects.

European Economic Outlook

Europe is expected to experience stagnation. The European Central Bank (ECB) may prioritize growth over inflation, with five rate cuts anticipated that could lower the deposit rate to 1.75%. This may lead to an increasing economic gap between the Eurozone and the U.S.

China's Economic Challenges

China's growth is estimated to slow to 4.0%, despite expected fiscal stimulus measures. Trump’s tariffs might complicate Beijing’s stabilization efforts.

Asian Market Divergence

In Asia, Japan, Taiwan, Malaysia, and the Philippines are predicted to perform well, while India, South Korea, and Thailand may struggle due to disinflationary trends.

Conclusion

The report underscores uncertainties from Trump’s deregulation and trade policies, contributing to global supply chain volatility and affecting investment strategies. Analysts suggest adopting USD long positions and selective rate plays, pointing to a fragmented global outlook.