Investing in 2025: Headwinds and tailwinds
Can the bull market sustain in 2025?
<div data-placement=«Mid Article Thumbnails» data-target_type=«mix» data-mode=«thumbnails-mid» style=«min-height:400px; margin-bottom:12px;» class=«wdt-taboola» id=«taboola-mid-article-thumbnails-116239813»> What are the likely headwinds and tailwinds?
Economics can trump Trump
There is a near consensus that the most unpredictable element that might impact the global economy and markets in 2025 is the Trump factor. Trump, being maverick and mercurial, is capable of taking totally unconventional and drastic decisions. But it is important to understand that even Trump, with all his powers, will be constrained by the logic of economics, which is beyond his control. The fact is that many of his declarations are tall talk and election rhetoric; it would be difficult to walk the talk. For instance, take the Trump threat to impose 60 percent tariffs on Chinese imports. Chinese goods are widely consumed in the US and even a 30 percent tariff will be inflationary. This will land the Fed, which is trying to soft-land the US economy, in a tight spot. Freezing the rate cutting cycle, which the Fed has successfully initiated, would be bad for the global economy in general, and the US economy in particular. Sharply raising the tariffs on Chinese imports would, therefore, be unlikely to be implemented. A more likely scenario would be a phased increase in tariffs, starting with say new tariffs ranging from 10 to 20 percent. Of course, Trump can afford to be harsher on imports from Mexico and Canada. Even though Trump had called India ‘Tariff King’, India is unlikely to be targeted in the first phase of the tariff hike.
Strong dollar is a headwind for emerging markets
Dollar has been
