In the United States, the trade war is affecting economic activity, which nevertheless continues to expand.
Despite uncertainties for the coming quarters, the US stock market is at an all-time high. It is not too late to invest.
Trade flows were reduced
The increase in US customs tariffs has profoundly disrupted international trade in goods. After an explosion in trade in the first quarter as businesses sought to avoid the new tariffs, trade flows have slowed significantly in recent months.
Is this a catch-up effect or a new commercial reality? Only time will tell. However, it is already clear that trade disruptions have weakened US economic activity.
Measured on a half-yearly basis to neutralise the high volatility of imports, US GDP growth has slowed significantly this year, to just 0.6% in the first six months of the year, compared with 1.4% for the same period in 2024.
Job creation at a low point
The labour market has also been affected by the trade war and more restrictive immigration policies.
Apart from the start of the Covid crisis, when millions of jobs disappeared virtually overnight, job creation in recent months has been the lowest since 2010.
And if the unemployment rate remains low, it is only because of the decline in the working population.
This is a direct result of restrictive migration policy, with the organisation of veritable manhunts to expel unwanted foreigners, but also of stricter rules for entering the United States.
Over the last six months, nearly 2 million people born abroad have left the US labour market.
Persistent economic uncertainty
The negative consequences of the trade war stem from higher tariffs, but also from uncertainty.
The agreement reached with Japan and the European Union, as well as the extended truce with China, has given economic players some visibility.
However, the economic uncertainty surrounding the US economy has not entirely disappeared.
The agreements secured by the United States with its main trading partners have not resolved all disputes. A new confrontation has already begun between Washington and Brussels over services.
The US President's intentions remain as opaque as ever, primarily since trade is now being used as a means of political pressure. He has raised tariffs on Brazil in retaliation for the legal proceedings launched against former President Bolsonaro, who is ideologically close to Trump.
The impact of the trade war on consumer prices is another cause for concern. US inflation rose to 2.7% from 2.3% in April. And this trend is set to continue, as most companies want to pass on the increase in customs duties to consumers.
Interest rates on the bond market will rise if investors demand higher yields to protect themselves from this higher inflation. And the Federal Reserve may have to pursue a more restrictive monetary policy to contain price increases unless Donald Trump succeeds in taking control of the US Federal Reserve.
Open warfare for the Fed
Trump has long criticised Fed Chairman Jerome Powell for not doing enough to support economic activity. The lower key interest rates demanded by the US President should also make it easier to finance the large public deficit.
Until now, Powell has resisted presidential pressure. But in recent weeks, several events have strengthened Trump's position.
The surprise resignation of a governor on 1 August allowed the White House to appoint a close ally to the Board of Governors, who is in favour of a sharp cut in the key interest rate and a weak pound.
Trump then demanded the resignation of another governor accused of mortgage fraud. If this move is successful, the appointment of a new ally of the President will give him a majority of four supporters out of the seven members of the Board of Governors.
The Board does not decide monetary policy alone; the President of the New York Fed and four regional Fed presidents also participate in the discussions. However, the latter can be dismissed at any time by the Board of Governors, which Trump's supporters could soon dominate.
In such a scenario, there is no doubt that everyone will think twice before refusing to lower the key interest rate, as the US President is clamouring for.
Investors remain calm
Economic uncertainties and the open war for control of the Fed are not worrying investors. They continue to favour US equities and are not turning away from dollar bonds.
While the trade war is hurting the US economy, the damage is less than in the major exporting economies, hence the undiminished attractiveness of the New York Stock Exchange. This is all the more true given that it is home to the tech giants that are currently so popular.
At this stage, the depreciation of the dollar is not seen as a real problem either. It favours US exporting companies and slows down imports, benefiting local producers. Profits made abroad are also automatically inflated, which supports the valuation of certain US companies.
Finally, in the bond market, the tensions arising from rising inflation and slipping public finances are not specific to the United States, but are widespread across all developed countries. In the absence of alternatives, Treasury bonds therefore remain a haven despite the fears of some analysts.
In concrete terms, allocate 5%, 15%, and 25% of US equities as part of a defensive, balanced, and dynamic portfolio. See below our complete resource allocation suggestion:
Dollar-denominated bonds are also attractive regardless of your risk profile.