Global Economic Policy Uncertainty is Spiking 📈

Key Takeaways

• Economic policy uncertainty around the world has surged to its highest point since 2020, as Trump tariffs stand to recalibrate supply chains.
• This is measured by an index covering 21 countries, weighted by GDP, that tracks news articles mentioning economic policy uncertainty.
• The U.S. stock market has whipsawed since Trump's inauguration as Canada and China threaten retaliatory tariffs on America.
• In response to escalating trade tensions, the number of Chinese firms investing in Mexican industrial projects has grown by twofold in the past three years in efforts to diversify supply chains.

Economic Policy Uncertainty Highest Since COVID-19

The Economic Policy Uncertainty Index climbed to 428.9 in January, just shy of its peak reading in May 2020.

As Trump makes trade policy a key issue, countries around the world are bracing for steep tariffs.

By one estimate, the price of SUVs assembled in North America could jump by $9,000 if a 25% tariff is imposed on Canada and Mexico.

Meanwhile, in Germany, car makers are increasingly looking to foreign markets beyond the U.S., which generates the highest number of sales for the already beleaguered industry.