Inside Trump’s First 6 Months: Policy Risk, Market Reactions, and What Comes Next
The global markets have rarely seen a political return quite like this. Six months into Donald Trump’s second term, the waves of economic disruption are still building. From revived trade wars to fiscal gambles, from the crypto spotlight to tensions with the Federal Reserve, this presidency has delivered far more than just volatility — it has redrawn the rules of engagement for investors and policymakers alike.
At EBC Financial Group, we believe the current environment is not simply unstable, but structurally uncertain. Every move — from tariffs to tweets — forces markets to recalibrate. Let’s take a closer look at how the past six months unfolded, and what investors should be watching next.
Tariffs Make a Return — and So Does Market Whiplash
One of the defining features of Trump’s early second-term agenda has been the reintroduction of protectionist trade policies. After a short delay that briefly lifted global indexes, the administration announced its “Liberation Day” tariffs in April. The reaction was swift. Markets shuddered, then partially recovered after learning that the bulk of the measures would be paused for 90 days.
But that grace period is now over. As of 1 August, the full tariff regime is set to launch. The framework includes a baseline 10 percent duty on most countries, alongside much sharper figures: 25 to 40 percent tariffs on imports from South Africa, Malaysia, and Thailand; a 50 percent duty on copper; and a 40 percent surcharge on transshipped goods via Vietnam.
Deals with the UK and Vietnam have been secured, while negotiations with China, Canada, and the EU remain unresolved.
As David Barrett, CEO of EBC Financial Group (UK) Ltd., explained:
"Markets are responding to a single decision-maker controlling tariff policy. That makes the environment more uncertain than usual, as the economic impact depends not only on policy details but on the next political impulse. We are not just seeing supply chain adjustments; we are witnessing a reshaping of global trade flows."
Economy Sends Mixed Signals Amid Policy Shakeups
The economic data has presented a complicated picture. Inflation eased from 3 percent in January to 2.4 percent by June, offering some breathing room. However, growth momentum has faltered. US GDP contracted at an annualised rate of 0.5 percent in Q1 — the first drop in three years — driven in part by pre-tariff inventory builds and import surges.
The labour market has also been uneven. May saw a sharp drop in federal jobs, with 22,000 roles cut under Trump’s “efficiency drive.” But June’s non-farm payrolls (NFP) defied expectations, with 147,000 new jobs added — far above the 110,000 consensus — and unemployment dipping to 4.1 percent.
Still, headwinds persist. Consumer spending and housing activity are softening, and sentiment is turning cautious.
"On the surface, economic indicators seem manageable, but they are not telling the full story," Barrett noted. "Retail sales have softened, construction activity is lagging, and consumer sentiment is visibly deteriorating. The question now is whether this is the start of a cyclical slowdown or something more structural."
Fiscal Expansion and the ‘Big Beautiful Bill’
Alongside executive orders, Trump scored a legislative victory with the 900-page ‘Big Beautiful Bill’ passed in late June. The package extends the 2017 tax cuts permanently, introduces targeted tax incentives, cuts Medicaid spending, and boosts defence and border budgets. It also raises the debt ceiling by $5 trillion.
The market’s reaction? Mixed.
Clarity on tax and the avoidance of a government shutdown helped steady short-term sentiment. But the expansion of spending and debt sparked concern about long-term fiscal pressure — especially if growth fails to keep up.
"The US has bought itself time, but at the cost of greater fiscal pressure," said Barrett. "For markets, all eyes are watching if these policies can drive real productivity and growth or whether they merely delay the reckoning."
The Fed: Between Political Pressure and Market Reality
Another defining thread has been the tension between the White House and the Federal Reserve. Trump has been vocal in urging rate cuts, but Fed Chair Jerome Powell has resisted, citing inflation risks and longer-term stability.
The US dollar has been sliding steadily since March, dragged by concerns over the tariff-driven outlook and rising national debt. Meanwhile, 10-year Treasury yields, which climbed to 4.8 percent earlier this year, now fluctuate between 4.0 and 4.6 percent. Recently, they’ve edged back up to around 4.4 percent.
With inflation currently cooling, pressure is mounting — from both sides.
"Inflation has eased for now, but the full effects of tariffs have yet to be priced in," Barrett added. "If costs rise further and corporate margins shrink, we could see a scenario where the Fed faces both political pressures to cut and economic pressure to hold steady. That's a difficult line to walk."
Crypto Embrace Sparks Debate
In a move that surprised many, the Trump administration has embraced digital assets. In March, the White House created a strategic bitcoin reserve, followed shortly by the launch of the official Trump memecoin, $TRUMP.
Prices soared, but so did scrutiny.
The SEC responded with a dedicated crypto task force, tasked with defining registration requirements and a clearer framework for oversight. Trump has also brought Web3 advocates into the policymaking fold, suggesting that regulatory conditions for crypto may ease.
But questions of ethics persist.
"There's a risk that crypto's credibility is undermined by political branding," Barrett said. "For the industry to mature, it urgently needs regulatory clarity."
Global Impact and the UK Angle
While the spotlight remains on the US, the implications stretch far wider.
For UK exporters, shifts in global trade dynamics may open up new windows — especially as US–China trade slows. Sectors where American or Chinese goods become less competitive could offer new market space for British businesses.
At the same time, volatility in energy prices and complex customs changes pose challenges. For manufacturers, this is a moment to rethink diversification and future supply strategies.
"Protectionism always comes with winners and losers," Barrett said. "The challenge is to assess exposure, act decisively, and stay ahead of shifting global demand."
What’s Next?
As we close out Trump’s first half-year back in office, the future remains uncertain — but undeniably consequential.
The Federal Reserve forecasts US GDP growth at just 1.4 percent in 2025, down from 2.4 percent in 2024. Inflation and unemployment remain contained, but the policy mix of tariffs, tax changes, crypto involvement, and fiscal expansion means the road ahead is anything but predictable.
For now, cautious optimism remains. Stronger-than-expected earnings, resilient employment, and signs of potential reform have given markets reason to hold steady — at least temporarily.
"This is not a moment for complacency," Barrett concluded. "Investors must remain vigilant. We are entering an era of policy-driven markets, where one executive order can reshape the global playing field overnight."
Disclaimer:
Investment involves risk. The content of this report is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product.
Publication date:
2025-07-16 06:48:22 (GMT)
