Chaotic and unpredictable, keeping up with Donald Trump\u2019s volatile trade war \u2013 never mind his presidency \u2013 can be tough.<\/p>\n
Back in April after his \u201cLiberation Day\u201d tariff announcement, the talk was of the president crashing the global economy. Then, after a Wall Street backlash<\/a>, the world learned the acronym \u201cTaco\u201d, which stands for \u201cTrump Always Chickens Out\u201d. Now, things are heating up again.<\/p>\n The president\u2019s decision to hit US trading partners \u2013 including Canada, Brazil, India and Taiwan \u2013 with new tariffs after his self-imposed 1 August deadline certainly reignites a threat to the world economy. Dozens of countries have been left reeling, and US consumers are expected to pay a heavy price.<\/p>\n However, there is a sense that things could have been worse. Nowhere more clearly is this reflected than on Wall Street: despite the chaos of the president\u2019s trade war, the stock market remains close to record levels.<\/p>\n After the latest escalation on Friday, and some worrying US jobs numbers, share prices took a hit, sliding by about 1%. But this is a setback rather than a rout.<\/p>\n A further slide could be ignited by this capricious president. Trump\u2019s decision to fire the official in charge of labour market data<\/a> and his war on the independence of the US Federal Reserve will make matters worse.<\/p>\n But despite the warnings of untold economic damage from the US tariff war earlier this year, the American economy has proven surprisingly resilient in recent months.<\/p>\n Last week, the president seized on US growth figures showing the economy had expanded at an annualised rate of 3% in the second quarter, far in excess of the 2.4% rate predicted on Wall Street. Could the \u201cfake news\u201d media have it wrong? Are tariff wars \u201cgood, and easy to win,\u201d as Trump claims?<\/p>\n While inflation has ticked up, from 2.4% in May to 2.7% <\/strong>in June, it is well below the peak that followed the height of the pandemic disruption and Russia\u2019s invasion of Ukraine, and is far from hitting the levels feared.<\/p>\n Back in April, in a country wrought with division, Democratic voters reckoned inflation was on track to hit 7.9% within a year, while Republicans said it would collapse to 0.9%.<\/p>\n Butthere is good reason why the US economy<\/a> has so far defied the prophecies of Armageddon. For starters, the hot-cold nature of Trump\u2019s tariff war means investors still anticipate further deals will be done to avoid the worst threats from ever materialising. The toughest tariffs introduced on Friday are only just arriving, too, meaning any impact has yet to emerge.<\/p>\n Most countries have not hit back with retaliatory measures, which would have dramatically worsened things by putting international trade into a deeper tailspin.<\/p>\n Meanwhile, knowing full well the dangers of this erratic president, businesses have been planning for months to avoid the worst-case scenarios.<\/p>\n US companies rushed to stockpile goods before the trade war, helping them to keep prices down for now. Some firms have taken a hit to profits, according to analysts at Deutsche Bank, reckoning this is better than testing struggling American consumers \u2013 worn out by years of high inflation \u2013 with further price increases.<\/p>\n The tariff costs are also being spread by multinationals, by increasing prices across the markets they operate in. In one high-profile example, Sony has put up the price of its PlayStation 5<\/a> by as much as 25% in some markets, including the UK, Europe, Australia and New Zealand. But not in the US.<\/p>\n Still, there are signs that consequences are coming. When US businesses exhaust their pre-tariff stockpiles, it is likely that prices will creep higher. Meanwhile, the uncertainty of an erratic president is hitting jobs and investment.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: <\/strong>Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n