Sun 16 March 2025 ▪
4
min at reading ▪
The shadow of the economic storm floats, colored bright red and unpredictable pragmatism. “Trumpcession” – this neologism that sounds like a warning – summarizes growing concerns in the face of a trade war with unforeseen consequences. Between recovery and restriction, Fed and Bank of England remain stuck between rates to be modified and threatening inflation. How to avoid the domino effect? The answer requires more than an economic manual: tactical courage.
Trumpcession: When protectionism becomes an economic boomerang
Donald Trump’s aggressive customs tariffs are not easy rhetoric. It acts as a catalyst and transforms concern for tangible reality.
In February 2025, the index of the purchase of conference councils rushed and revealed unprecedented distrust of four years. American consumers, historical growth engine, slow down its expenses. Alarming Signal: When trust is stepping, the recession monitors.
However, the most pernicious effect could come from import costs. High prices for foreign products would increase prices and fed tough inflation.
Nigel Green, Devere, summarizes the dilemma: “Inflation pressures and economic slowdown creates a vice. The Fed, used to juggling with cycles, finds itself to face a fragile balance. Reduce rates and stimulate loans? Risky prices? The choice is Cornelian.
In parallel, Trump’s administration seems to be indifferent to the stock market shocks. Worse, the decline in production is sometimes perceived as a necessary evil to “re -balance” the exchange.
Dangerous logic according to experts: The extended trade war could suffocate the entire sector, from production to logistics. Fed by announcing its decision on rates on Wednesday will have to decide between emergency and caution.
Banque of England and Fed: Pressure Balance of Game
Threadneedle Street and Fed share a common scenario, but not the same tools. At the end of 2024, the Bank of England expected controlled inflation and rates below 4 %in 2025.
Today the British championship rate stagnates 4.5 %, which slightly exceeds the Fed rate (4.25 % – 4.5 %). A minimum but revealing gap: both institutions have to deal with weakened labor markets and employers in defensive.
In the UK, the construction and production sectors are seen in unemployment, while the release is growing. A similar situation across the Atlantic, where vacancies become rare.
Difference? The impact of trumps on the US economy is more direct and exposes the Fed the risk of overheating. The Bank of England is afraid of training effect: an increase in British import costs if the EU responds by US measure.
However, the glow persists: lending. Lower rates could alleviate households and businesses, but at what price? “Take the lead, don’t follow,” it takes to get Green. A proactive approach would now include gradual decreases, rather than a drastic measure later. However, the break would assess the real impact of prices. On Thursday, the Bank of England will return its judgment under the anxiety of investors. Even Elon Musk could be a victim, at stake of Tesla.
Maximize your Cointribne experience with our “Read to Earn” program! For each article you read, get points and approach exclusive rewards. Sign up now and start to accumulate benefits.
Evariste, fascinated by Bitcoin since 2017, has not stopped documenting on this topic. If his first interest focused on trading, he now tries to actively understand all cryptocurrency progress. As an editor, he tries to permanently provide high quality work that reflects the condition of the sector as a whole.
Renunciation
The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.
