Tariffs dramatically change the tenor of global trade, and other economic news to know

The past couple of weeks have delivered extraordinary economic headlines. The common thread is dramatic uncertainty and disruption as the world adjusts to the new US administration.

The stakes are perhaps highest for geopolitics and domestic US politics, but the global economy has been roiled, too, by fears of an escalating trade war. Nervousness is particularly high in Europe, which has been mired in weak growth for years. And now, all eyes are on Germany as a new government takes shape in the region’s largest economy following a pivotal election over the weekend.

The world has had to become a lot more familiar with the concept of tariffs. Since taking office, the Trump administration has announced numerous plans for these taxes on foreign imports – though it’s worth noting that only one, a new 10% levy applied to Chinese goods, has been enacted so far.

Most recently, the White House unveiled plans for steel and aluminium tariffs, and levies for cars, chips, and pharmaceuticals are being floated. There are also proposals being drawn up for “reciprocal” tariffs; experts think these broad, tit-for-tat measures could disproportionately impact emerging economies. There are fears they could ultimately spark a wider trade war, something that chief economists were already warning about last month.

Dani Rodrik of Harvard Kennedy School suggests the best way of dealing with this flurry of threatening overtures is to keep calm and back away. But even if they’re not enacted, tariffs can have a disruptive impact – panic buying has already raised prices for steel and aluminium. The law firm Reed Smith publishes a useful tracker to stay abreast of the Trump tariffs in real time.

Countries and regions are starting to talk tough about the need to boost growth. In the US, a drive to cut taxes and regulations is getting underway. This has elevated expectations for the prices of financial stocks, but if other places adopt similar policies experts worry about a costly race to the bottom.

There have also been deregulatory moves on the other side of the Atlantic, where the European Commission is trying to ramp up competitiveness with plans for a “bolder, simpler, faster” EU. These plans stretch from accelerating on AI to bolstering investment in defence, all while “sustaining our quality of life.” It promises to be formidable balancing act.

Following federal elections in Germany over the weekend, it looks likely that a conservative-led coalition will come to power. One of the key economic questions is going to be whether the new government will try to loosen the country’s constitutional debt brake, which critics argue is holding Germany back from much-needed investment. Fiscal prudence is something of an article of faith in Germany, so the fact that changes to the debt brake are even being considered speaks volumes.