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Shkruar nga Pamfleti
World economy after six months of trade war: Strong, beyond expectations
Six months ago, when US President Donald Trump declared a trade war with unprecedented aggression, the economic world was expecting a major shock. Financial markets predicted a deep recession, US consumer confidence fell sharply and several “real-time” indicators warned of an imminent economic slowdown. Today, however, even as tensions with China continue, the predicted catastrophic consequences have not materialized.
According to a gauge of economic activity compiled by Goldman Sachs, after a slump in the spring, the global economy is growing at a pace comparable to that before Trump launched his trade offensive. JPMorgan’s global composite PMI, a fast-track gauge of economic activity, hit a 14-month high in August. Another estimate from the Atlanta Federal Reserve shows that U.S. GDP in the third quarter of 2025 grew by 3.9% year-on-year, a strong performance, although the fourth quarter is expected to be weaker. Among OECD countries, only Finland is currently in recession, compared with eight countries at the beginning of 2023. Global growth expectations for 2025 have improved from 2.2% in April to 2.6% today, a return to the level at the beginning of the year.
This economic resilience is partly due to the fact that Trump’s trade war has turned out to be less severe than initially thought. In April, the new policies suggested effective tariffs of up to 28%. Today, after some rollbacks, imports face an average tax of just over 10%. Moreover, aggressive fiscal policy, especially in the US, has helped aggregate demand. However, these favorable conditions may not last: Trump could impose new tariffs at any time, and many governments are expected to start reducing budget deficits.
Despite this, financial markets remain optimistic. A positive corporate earnings season is expected in the third quarter, after a 7% annual growth in the second quarter. The MSCI ACWI index, which represents global stock markets, is at record levels. “Cyclical” companies, which provide everyday consumer products such as vehicles or construction equipment, are performing better than “defensive” ones, a typical signal of economic expansion.
Many concerns about the global economy also seem more muted than they first appear. One fear is that investment in artificial intelligence – especially in data centers – is the only thing keeping the economy afloat, and a collapse of this technology would be devastating. This sentiment is most prevalent in the US, where investment in computing hardware and software accounted for 40% of GDP growth last year. But data shows that at least two-thirds of this investment is unrelated to AI. And outside the US there is no evidence that the technology is boosting economic growth.
The second concern is about employment. In the US, job growth has slowed. The upcoming jobs report, suspended due to the government shutdown, could show almost zero growth. Some attribute this to the effects of AI, but a new study from the Yale Budget Lab notes that there has been no discernible disruption to the job market since ChatGPT’s emergence. In other OECD countries, employment remains strong: 3 million jobs were added in the first half of the year alone.
The third concern is consumer confidence. In the US, it has recovered from the lows of April and May, but remains well below pre-pandemic levels. Globally, uncertainty over economic policy remains high, and Google searches for the word “tariffs” continue to be high – a sign that Trump’s policies are still influencing public perception. Some warn that a tech stock market crash would make things worse, but, six months after the offensive began, the global economy is showing surprising resilience to crises. / Adapted from “Pamphlet” by “The Economist”
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