It’s been a wild start to 2025, and uncertainty is now the new normal. With a tit-for-tat trade war officially under way financial markets have been shaken, and volatility prevails.
Convera is excited to announce its latest Market Insights report, Trump, Tariffs and Trade, exploring how the current geopolitical situation might impact global commerce this year.
If your cash flows are being impacted by recent swings in currency volatility, our report offers key insights into:
- What trade tensions and tariffs mean for economic growth in 2025
- The latest data and projections for key currency pairs
- Insights to help your business manage FX risk in the year ahead
Key insights from the report
Uncertainty: The new normal
Global trade is near record highs, but value chains are being reshaped by geopolitical tensions and shifting policies. Companies now weigh politics alongside profits, driving trends like friend-shoring and reduced foreign investment despite the US maintaining its position as the world’s top importer. This combination of global fragmentation and US trade dominance ensures that President Trump’s tariff policies remain critical.
Trump’s influence is heightening uncertainty, with his bold policies on trade, immigration, and global alliances keeping markets on edge. Persistent shifts in alliances and policy make it harder for investors to navigate risks like tariffs, complicating the economic outlook.
As tariffs rise, retaliation follows
The U.S. administration quickly raised tariffs on Canadian, Mexican, and Chinese imports, which in turn triggered swift retaliation. Canada plans phased tariffs on $100 billion worth of U.S. goods, Mexico is expected to follow, and China has imposed levies of up to 15%.
Investors had grown complacent about tariff risks, but this escalation signals worsening trade relations and heightened recession concerns. On Polymarket, recession probability jumped from 23% to 40% in two weeks. Fixed-income markets reflect similar fears, with expectations for three Federal Reserve rate cuts now fully priced in (source: Bloomberg).
Dollar ambiguity
The U.S. dollar finds itself in a tug-of-war between the short-term lift from tariff hikes and the downward pressure from weaker economic data, fueling volatility in FX markets. Whilst tariffs may temporarily strengthen the greenback, they also pose a long-term risk by discouraging international demand and debt issuance in dollars. This contradiction is significant as America’s ability to sustain higher debt levels is closely tied to the dollar’s unique global status, but protectionist measures could gradually erode that advantage. In an environment where market signals are increasingly clouded by noise, a scenario-driven approach to FX forecasting has never been more essential.
Download the report, prepare for the future
President Trump’s trade policies, rising tariffs and shifting political alliances are causing uncertainty in currency markets, and increasing risks for companies operating across borders. Retaliatory tariffs, friend-shoring and trade realignment are forcing businesses to rethink their sourcing strategies, while increased currency volatility is complicating cash flow management.
Convera’s latest Market Insights report, Trump, Tariffs and Trade offers a comprehensive analysis of these challenges. Download the report today to help safeguard your financial operations and make informed decisions in 2025’s rapidly evolving landscape.
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