The Weekly Briefing from Capital Economics Lessons from a drama-filled week in Trumpland, China upends the EM development model and more
Feb 7, 2025
Neil Shearing, Group Chief Economist at Capital Economics, dives into a week packed with political and economic drama. He evaluates Donald Trump's trade policies and their surprises, discussing how the US labor market differs from Europe's struggles. Leah Fahy, a China economist, teams up with Shilan Shah to reveal how China is reshaping the industrial landscape by taking market share from low-end emerging market manufacturers, challenging traditional economic models. The conversation offers crucial insights into global trade tensions and economic disparity.
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Trade War Lessons
- Trump is willing to make deals, as seen with the rolled-back tariffs on Canada and Mexico.
- However, the tariffs imposed on China suggest a different approach to non-allies.
Caution Against Complacency
- Don't over-interpret Trump's statements or assume all threats will be rolled back.
- Be cautious of market complacency regarding the potential consequences of these actions.
Global Economy Fracturing
- The global economy is fracturing into US and China-led blocs.
- Trump's actions may push unaligned countries towards China.