The world’s key economies continue to perform quite well. This positive development, however, is probably being upended now. The shift is entirely due to the decision by President Trump to start a trade war on his own initiative. Trump is probably right about the way America’s trading partners have taken advantage of its lax trading rules. However, his moves on trade are quite clumsy and uneven. It remains to be seen whether the result will be a recession. The products subject to tariffs are basic products needed in the manufacture of many goods. The idea that the tariffs needed to be instituted for security reasons is rather preposterous. None of the countries affected are security risks, especially not Canada or Germany or the UK.

The Trump tariffs have not gone into effect yet and we shall see how things develop once they are fully in place. Moreover, there is a G7 meeting (or G6+1) this weekend in Quebec and it is expected to be contentious. It is entirely possible that the US tariffs will be watered down by the end of that confab. Every participant, other than the US, is dead set against them. Will that mean Trump will get enough of a thrashing for him to back down? Probably not.  But we probably will see the members of G6 make clear that the US will have a hard time going forward. Expect more stock market volatility.