Economic News:
The Federal Reserve kept interest rates steady at 4.25%–4.5% following its March policy meeting, as expected, while maintaining its forecast for 50 basis points of rate cuts in 2025. However, officials raised their inflation expectations for 2025 and lowered GDP growth projections, citing increased economic uncertainty. Despite this, Fed Chair Jerome Powell struck a reassuring tone, suggesting that tariff impacts would be temporary and that long-term inflation expectations remained anchored around the 2% target, which markets viewed positively. Meanwhile, economic data painted a mixed picture—retail sales for February rose just 0.2%, well below estimates, and January’s decline was revised lower, while the Empire State Manufacturing Survey signaled deteriorating business conditions. In contrast, housing market data was more upbeat, with existing home sales jumping 4.2% in February due to rising supply, and housing starts exceeding expectations at an annualized rate of 1.5 million, despite a year-over-year decline.
What We’re Showing:
Today, economic policy uncertainty is surging to its highest point since 2020.
As Trump tariffs stand to recalibrate supply chains, the U.S. stock market has whipsawed in response. So far, Canada and Europe have hit the U.S. with retaliatory tariffs while businesses around the world are looking to diversify supply chains as they brace for tariffs.
This graphic shows global economic policy uncertainty since 1997, based on the Economic Policy Uncertainty Index. The Economic Policy Uncertainty Index climbed to 428.9 in January, just shy of its 2020 record.
This is measured across 21 countries, weighted by GDP, according to news analysis. Below, we show how the index has performed across key events over the past three decades:
Key Insights:
As the trade war escalates, Trump has hit Canada, the European Union, Mexico, and China with tariffs. Recently, amid 50% counter tariffs on U.S. whiskey from the European Union, Trump threatened a 200% tariff on alcoholic beverages from the bloc. Meanwhile, Europe is considering imposing further retaliatory measures on U.S. exports of steel, aluminum, beef, and nuts.
At the same time, German car makers are increasingly looking to foreign markets beyond the U.S., which generates the highest number of sales for the already beleaguered industry. Like the EU, Canada plans to impose tariffs on the U.S. following a 25% levy on steel and aluminum. Canada stands as the largest exporter to the U.S. of both steel and aluminum, valued at a combined $16.5 billion in 2024. These countermeasures also include a 25% tariff on tools, computers, and sports equipment, altogether targeting $28.9 billion in U.S. exports. By one estimate, the price of SUVs assembled in North America could jump by $9,000 if a 25% blanket tariff is imposed on Canada and Mexico in ongoing trade disputes.