In our latest Eco Podcast episode, our experts David Chollet, Hervé Goulletquer and Sébastien Gonnet explore a timely question: are we truly seeing a normalisation of the global economic environment, or is it merely an illusion?
Equity markets responded positively to the US administration’s U-turn on tariffs. However, the signals from government bond and foreign exchange markets appear decidedly more cautious.
So, are we returning to normal? Unlikely, and here are three reasons why:
- President Trump has yet to finalise his overhaul of the United States’ trade relationships. More surprises are almost certainly on the horizon.
- The global landscape is shifting, and the structure of international trade tomorrow will not mirror that of today. We must prepare accordingly.
- The short-term impact cannot be ignored: increasing average US tariffs from 2.5% to at least 10–12% (albeit no longer exceeding 20%) will inevitably affect demand and dampen growth momentum. What knock-on effects will this have on partner countries? Deteriorating economic prospects will weigh heavily on public finances.
Within this context, the US budget debate takes on heightened significance: tax cuts on one side, reductions in social spending on the other. What are the implications for public debt? This concern is echoed here in France, where fiscal headroom remains tight.
🎬 Watch the full podcast below: