President Trump is on a roll and the rest of the world needs to pay attention!
17 March 2025, 15:00
Very few people I know would choose President Donald J Trump as their guest of honour at their dinner table on a Saturday night.
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I wouldn’t.
However, for the life of me, I have no idea why the liberal-left media here in Old Blighty, luminaries such as Alastair Campbell and Rory Stewart to name but a few, get so outraged and fired up at the political antics of the 47th President of the US.
They appear inconsolable on issues such as immigration, tariffs, DOGE (cuts in public expenditure), the embracement of Putin and his disgraceful despotic regime, to the exclusion of its European allies, whilst at the same time almost spitting Zelenskyy out with contempt and unsurprisingly conveying a perceived lack of sympathy for Gaza. We must also not forget Trump’s outrageous designs on Panama and Greenland.
As far as I can see there is nothing on Trump’s agenda that the public at large was not warned about. Also, I am none too sure that Trump is remotely bothered by what we in the UK and those in Europe think of his policies or actions. We were all warned about ‘America First’ and ‘MAGA!’
Hopefully the ‘penny has finally dropped.’ Those US voters who voted Republican are on the whole pleased that Trump is starting to deliver what he promised. The rest of the world for the time being, ‘can go to hell in a hand cart.’
Very sadly the US can no longer be relied upon as an ally and the UK probably does not enjoy that special relationship anymore. There are still a few diplomatic crumbs that fall, metaphorically, from Lazarus’s table; the main one for the time being is our prowess in global security, where we always punch above our weight.
There are far greater political commentators than me; so I will keep my comments to Trump’s Tariff policies and the effect those and other policies have on markets. As we have seen in the last two weeks US equity markets have enjoyed the roller-coaster ride investors have been subjected to.
Global indices Year-To-Date – FTSE +4.51%, DAX +14.56%, CAC40 +8.58%, DJIA -2.13%, S&P500 -3.91%, NASDAQ -7.92%, NIKKEI -5.73%, HANG SENG +22.10%, SHANGHAI +4.81%, FTSE 250 -3.12%
As you can see from the above table, all US bourses have surrendered their entire 2025 gains and in the case of the NASDAQ, including last year’s ‘magnificent seven’ just under 8%. European bourses have so far been ambivalent to these severe US machinations, as have the Far East, apart from Japan, which has struggled with the strength of the Yen.
Equity markets in the US remain uncomfortably volatile. Trump’s moods towards tariffs are hard, for even the most perceptive of mind readers, are almost impossible to read, let alone gauge the timing. He must know that however much he loves the word ‘tariff’, he knows tariffs are damaging for trade and highly inflationary.
Last week Simon Nixon of ‘Wealth of Nations’ observed the S&P500 briefly dipped into official “correction territory”, down more than 10% from its February ‘high’, while the NASDAQ which, has been the engine of US outperformance, is down 13%. That reflected fears that the uncertainty caused by Trump’s tariff threats and assaults on the federal government are undermining business and consumer confidence to a degree that some even say could tip the US into recession.
US markets currently trades at 23 times next year’s forecast earnings, which is 15 percent above its long-run average. On a price to sales basis, the S&P 500 trades at a higher multiple of sales than at the top of the dot-com bubble in 2000.
Treasury Secretary Scott Bessent made it crystal clear that Trump felt Wall Street could take care of itself. The Government’s main focus was Main Street. Bessent said he was not worried about the recent downturn. ‘Corrections’ are healthy. Traders are far from convinced. Volatility has seen prices bounce around on only a limited amount of business. If Trump’s truculence were to be exacerbated, most Wall Street acolytes will assume that markets will need to take the downbeat mood on the chin. Yes, markets would fall further.
Yesterday US growth has been revised downward to 2.2% in 2025 by the OECD and to1.6% in 2026. Higher GDP of 2.4% and 3.1% had been expected for this year and next. The UK economy will grow only 1.4% this year, as opposed to the 1.7% previously anticipated. That would be a better performance than most European countries. The FED, regardless of the President’s wishes, are likely to keep rates on hold this week. Inflation did fall from 3% to 2.83% last month, but with the international tariff trade war raging, inflation is likely to rear its ugly head before too long.
Trump likes the idea of lower taxes, the creation of wealth and falling interest rates. With his trade battles with Canada, Mexico, China and the EU likely to select another gear, stock prices may find an extended rally hard to sustain. I know few more ambitiously avaricious individuals than Messrs, Trump, Musk, Bessent and Lutnick. They smell deals and wealth in both nostrils. If their hopes and dreams are not fulfilled before too long, there could well be a change of heart. Nothing is forever for the ‘Big Man from Mar a Lago’. He can be light on his feet if needs must.
The rest of the free world should be eternally grateful to President Trump. His irritation at Europe not paying their full dues for defence, has forced European countries to reset their ideas by increasing their budgets dramatically and not by just 0.2%. They need to get to nearer 4% of GDP sooner rather than later. Increases of that magnitude will not be delivered overnight.
Who know whether Putin will stop stalling on a peace agreement with Ukraine. One thing is for sure, that unless Europe and the UK fulfil their defence obligations, there is no chance of Trump underwriting backup defence support on any Ukraine peace agreement.
Russia in isolation is a weak economic unit though remains a military danger. However, working hand in glove with China, that would be a major global threat. The world’s political imponderables will continue to be a challenge. Friendly allies are becoming harder to identify.
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David Buik is LBC's Markets and Business Commentator.
LBC Opinion provides a platform for diverse opinions on current affairs and matters of public interest.
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