In February 2025, Donald Trump announced new tariffs of 25% on aluminium and steel imports, with the aim of encouraging foreign investment and boosting domestic production. While the tariffs are set to take effect on March 12th, they could hurt America's allies more than its adversaries and negatively impact its own economy. The US imports significant amounts of steel and aluminium, much of it tariff-free from countries like Canada, Mexico, Brazil, and the EU. Although past tariffs led to some investment in domestic steel production, output and employment have remained low. The tariffs could raise prices for consumers and industrial buyers, with little increase in domestic production. Moreover, global metal markets may suffer, as other countries might introduce trade barriers in response, potentially leading to depressed international prices and economic harm.

Over the past decade, Chinese local officials have become increasingly cautious in their work, driven by fears of punishment due to heightened scrutiny and anti-corruption efforts under Xi Jinping. While officials once competed fiercely to drive economic growth, many now adopt superficial measures to avoid being targeted by the Communist Party's inspectors. Despite this, the government needs them to stimulate economic activity, especially as growth slows. In response, officials have been sluggish in using funds allocated for infrastructure projects, with billions still unspent. The government is attempting to revive morale by implementing a "three distinctions" policy to differentiate between genuine corruption and unintentional mistakes. The Central Commission for Discipline Inspection (CCDI) is also trying a softer approach, holding "heart-to-heart" talks with officials and addressing false corruption claims. However, the ongoing harsh anti-corruption campaign still limits officials' willingness to take action.

The EU's economic growth remains stagnant, with no growth recorded in the final quarter of 2024. Ursula von der Leyen and Christine Lagarde have stressed the need for faster growth to protect Europe's quality of life and security, yet growth prospects are limited. Europe's ageing population and lack of innovation dampen productivity, while external demand is weak. Consumer confidence remains low, and the European Central Bank (ECB) struggles with inflation. Although wage growth has risen, consumers are saving more, and businesses are hesitant to invest. Efforts to boost spending on defence and supply-side reforms may help, but they are unlikely to provide a significant economic boost. The EU faces the challenge of increasing investment and tackling structural issues to secure long-term prosperity.

The wealthiest 10% of Americans are significantly driving economic growth, with their spending accounting for nearly half of all consumer expenditure, a record high. Despite rising inflation, this group continues to spend freely on luxury items, vacations, and investments, benefiting from substantial gains in stocks, real estate, and other assets. In contrast, spending among middle and lower-income households has dropped. The top 10% has increased their spending by 12% from September 2023 to September 2024, while the bottom 80% has struggled to keep pace with inflation. The disparity is widening, with the affluent benefiting from higher asset values, contributing to greater economic reliance on their continued spending. However, any downturn in the stock or real estate markets could severely impact the broader economy.

The week starting February 24 will focus on key economic data and political developments affecting global FX and bond markets. In the U.S., the PCE inflation data for January, the Federal Reserve's preferred inflation measure, is expected to influence market expectations for interest rate cuts. Additionally, consumer confidence, GDP data, and housing figures will be released, alongside potential updates on President Trump’s trade tariffs.
In Europe, attention will be on the results of the German elections, with implications for fiscal policy, while in Asia, Japan’s inflation data and South Korea’s interest-rate decision are expected. The Bank of Korea is likely to resume rate cuts due to weakening growth. China’s PMI data and Hong Kong’s budget will also be scrutinised, with concerns over trade tariffs impacting their economies.
Other key events include GDP reports from Canada, Switzerland, and India, alongside inflation and consumer sentiment data from several countries.

Recent trends in global markets signal potential upheaval, particularly for U.S. stocks. While the U.S. stock market accounts for a disproportionate share of global value, the usual correlation between U.S. and non-U.S. stocks has recently broken down. Analysts highlight a significant divergence in the performance of U.S. growth stocks, like Nvidia, and international markets, especially in the context of tariffs and fluctuating policies under Donald Trump's administration.
Research indicates that large U.S. growth stocks may face poor returns over the next decade, with international value stocks offering more attractive opportunities. U.S. growth stocks are at historically high valuations, while developed-market value stocks outside the U.S. are at their lowest. Predictions show that U.S. large growth stocks may deliver just 1.8% annual returns, whereas non-U.S. developed-market value stocks could offer 10% returns, with emerging markets potentially delivering even higher gains.
Overall, while the U.S. has dominated the market, international stocks, especially value stocks, may offer better prospects moving forward, presenting a potential shift in global investment dynamics.

The UK's net zero sector is growing three times faster than the overall economy, with significant contributions to climate action, energy security, and job creation. In 2024, the sector grew by 10%, generating £83bn in gross value added (GVA), and employs nearly a million people in full-time jobs, offering wages above the national average. The Confederation of British Industry (CBI) report highlights that the net zero economy includes businesses in renewable energy, electric vehicles, green finance, and waste management, and is widely distributed across the UK.
The net zero sector is already larger than farming and market research, and its growth is expected to continue. It is seen as vital for both environmental and economic progress, offering high-wage, productive jobs. Critics of net zero, such as the Reform UK party and some members of the Conservative party, have argued it harms the economy, but the report refutes these claims, stating that net zero is a key driver of economic growth. Additionally, the push for clean energy is essential for energy security, reducing reliance on fossil fuels and volatile energy prices.

Ministers are relaunching trade negotiations with India in a bid to secure a multibillion-pound free trade agreement aimed at boosting the UK's struggling economy. Business and Trade Secretary Jonathan Reynolds visited Delhi to meet his Indian counterpart, Piyush Goyal, marking the 15th round of talks since they were paused in May due to the UK general election. Both countries, which are among the top six global economies, have a trade relationship worth £41bn, with India expected to become the third-largest economy by 2028.
The trade deal, a priority for the UK government, is seen as crucial for British businesses, offering opportunities in manufacturing, infrastructure, financial services, and more. However, negotiations are challenging, with India pushing for concessions on issues like worker visas and the UK’s planned carbon tax. Despite previous setbacks under past Conservative leaders, Reynolds is determined to reach an agreement that will support British exports, particularly in tech and life sciences, to India’s growing market.

Over 150,000 Canadians have signed a petition calling for the revocation of Elon Musk’s Canadian citizenship due to his alliance with former US President Donald Trump. The petition, launched by author Qualia Reed and sponsored by MP Charlie Angus, criticises Musk for advising Trump, who has repeatedly threatened to annex Canada. Musk, born in South Africa but holding Canadian citizenship through his mother, has been accused of undermining Canada’s sovereignty by supporting Trump’s policies. The petition urges Prime Minister Justin Trudeau to strip Musk of his citizenship. The petition has gained significant traction, surpassing 157,000 signatures.