US tariff policy in 2025 will likely challenge the predictability of global commerce and provoke significant counteractions from trading partners. Indeed, the ripple effects could also be larger than during Trump’s first term.
“This time around, trading partners such as China, Mexico, and the EU are prepared to strike back,” said Lazard Geopolitical Advisory (LGA) in its assessment of key trends in 2025.
Escalating tariffs and counteractions from trading partners will increase the complexity of trade, and companies will need to consider both political and economic sustainability of supply chains.
In addition, China’s weak growth and decision to double down on exports will likely spur further trade restrictions from emerging and developed economies, said LGA.
Moreover, “retaliatory tariffs could create upward inflationary pressures that create pricing challenges and in turn may impact the path of interest rates”.
The ripple effect of Chinese overcapacity threatens not only Western firms but also the broader stability of global trade, said LGA, so the key question for China is how it seeks to balance the domestic needs of its economy against international pressure to change its export strategy.
Meanwhile European growth may also be negatively affected by Trump trade policies.
“Challenges will deepen in the year ahead as Trump’s protectionist agenda creates a double whammy: potential tariffs on Europe which may sap growth and a Trump tariff wall against China likely to redirect cheap Chinese exports from the US to Europe,” said LGA.
More broadly, compute infrastructure will remain a determining factor in the “gold rush” for superintelligent AI.
“Governments will compete to localise infrastructure and know-how through incentives for investment and talent, streamlined permitting, and deregulation,” said LGA.
