Keeping an Eye on Global Trade and Inflation Trends in 2025.

As we look ahead, it’s clear that global trade dynamics and inflation concerns will continue to shape the economic landscape — and by extension, tax and business planning. A key factor affecting the Federal Reserve’s decisions on interest rates is the potential inflationary pressure from tariff-driven price hikes. While Fed Chair Jerome Powell doesn’t currently anticipate a sharp rise in expectations, market observers are keeping a close watch, remembering how quickly conditions shifted in 2022.

On the trade front, shipping rates are retreating from last year’s highs, with ocean freight now experiencing a glut of capacity. The Red Sea crisis temporarily complicated shipping routes, but as that stabilizes, capacity should outpace demand. Meanwhile, new tariffs on China and the possibility of sector-specific tariffs on countries like Canada and Mexico are back on the table. The Trump administration is considering rolling out additional tariffs this April, including hefty levies on Chinese-built ships — a move that could unintentionally hurt U.S. ports and shipbuilders by raising costs on the very industry it aims to protect.

Legal and logistical barriers mean these proposed tariffs won’t go into effect overnight. Sector-specific tariffs require detailed investigations and formal processes before implementation, which could drag out timelines. Businesses that rely on imported goods should be prepared for shifting costs and regulatory hurdles.

China’s economy, for its part, has hit some turbulence. Industrial production and export growth are slowing, and rising trade barriers are contributing to weaker labor markets. Beijing is countering with fiscal stimulus plans — raising wages and pensions to encourage domestic spending — but ongoing tariffs and market corrections may blunt the impact of those efforts.

For businesses and individuals alike, staying ahead of these developments is crucial. Shifts in trade policy, inflation, and tax regulations inevitably ripple into investment decisions, estate planning, and cross-border business strategy. We’re keeping a close watch and will continue to guide clients through the implications as these policy moves unfold.

Thanks for reading, and remember, keep looking ahead.

All the best,

MD

Reference: The Kiplinger Letter: Forecasts for Executives and Investors-Vol. 102, No.14