- 29/1/2025

A new world order

2 min

The return of Donald Trump

Donald Trump's return to power takes us back eight years. But the world has changed a lot since then. The COVID-19 pandemic has exacerbated tensions between different regions of the world. Inflation has returned, value chains have been questioned, deficits have deepened almost everywhere, and relations with China have deteriorated, particularly in the United States.

Good numbers in the US, but beware of China

The US economy is in good shape, despite inflation remaining too high in services, which many Americans have strongly criticised Joe Biden for. The labour market is in full swing, with a negligible unemployment rate. However, relations with China are problematic and will be central to the new White House policy. Between 2016 and 2024, the bilateral trade deficit between the US and China fluctuated between $270 and $420 billion, which is very high. However, the situation has changed as China has just experienced a 2024 marked by very slow GDP growth, one of the lowest recorded in 30 years, excluding the COVID-19 period.

Economic life will be influenced by Washington's announcements

The impact of these decisions on financial markets will not be easy to analyse, but we can already bet that the promised support measures for American industry will be clarified and implemented. And this should please the markets: the dollar has been rising since Donald Trump's victory, the stock market is breaking records, and most recent figures are surprising with their dynamism. The future evolution of US interest rates remains a mystery, as ideally, more signs of inflation moderation would be needed for the Fed to announce a new rate cut.

Europe: uncertainty and concern

In Europe, the atmosphere is much less positive since the start of the year. Confidence indicators are deteriorating in many countries, and weak growth and concern dominate. What will be the impact of tariffs on exports on the US? How to compensate for the reduction in US aid for defence? How can we simplify excessive European regulations that are increasingly undermining businesses? Finally, what kind of monetary policy is being sought to revitalise a weakened Europe?