Trump, Tariffs, and a Sagging US Economy: What Role is Geopolitics Playing in the Behavior of American Financial Assets?

Trump’s comments on the US economy facing a ‘transition’ have done little to help share prices and Treasury yields are falling.  So what are some of the possible implications of less rosy picture for the US economy?

Yale University’s Budget Lab does some very interesting work on timely issues, and the effects of the proposed/randomly applied/removed tariffs is presented here.  Have a look: https://budgetlab.yale.edu/research/fiscal-economic-and-distributional-effects-illustrative-reciprocal-us-tariffs

Some months ago, the Budget Lab seemed to be somewhat prescient when it addressed the various political risks to America’s ‘safe harbor premium.’  The Lab used our ICRG ‘composite index of political metrics…’ to show the US’ score ‘…has been broadly falling…since 2018, as the US has gone from the second highest in the G7 (safest, after Canada) to now the second lowest (riskiest, after France).

The study was recently picked up by Peter Coy of the New York Times, in which he addresses the topic of the risks to the US in an article titled ‘What Would Happen If The US Suddenly Seemed Like A Risky Investment?’ (https://lnkd.in/efW8bV87)

All solid reading when time permits.

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