Trump’s Economic Reality Check

Good morning, Markets are in a free fall, leaders are playing trade poker, and ceasefires now come with fine print. Meanwhile, the U.S. wants India to roll out the red carpet for Teslas while pretending tariffs don’t exist. Just another day of making bold moves and hoping reality doesn’t notice.

Enjoy the present and appreciate the experience!

TRADE WAR
Fantasy meets reality

Donald Trump’s vision of an economic revival, articulated in his latest speech to Congress, is colliding with reality. While he boasts of a thriving American Dream, markets, businesses, and consumers are signalling distress. His aggressive tariffs—25% on goods from Canada and Mexico, along with threats against China, the EU, and Japan—are disrupting global supply chains and fueling economic uncertainty.

Initially, investors cheered his election, anticipating tax cuts and deregulation. However, those hopes are fading. The stock market has lost most of its post-election gains, consumer confidence is waning, and inflation fears are mounting. Trump’s belief in tariffs as economic boosters remains steadfast, despite clear signs of strain. His postponement of car duties is brief, offering little relief to industries struggling to adapt.

Compounding the problem is a White House filled with advisors who seem unwilling—or unable—to counter Trump’s economic impulses. Wall Street’s concerns are brushed aside, and business leaders hesitate to challenge him. Meanwhile, his proposal for "reciprocal tariffs," which would demand case-by-case duties on American exports, threatens to upend the global trade system, reviving outdated policies abandoned a century ago.

Beyond trade, Trump’s protectionist stance risks a showdown with the Federal Reserve. If tariffs drive inflation, the Fed faces a dilemma: raise rates to curb price hikes or cut them to spur growth. With Trump’s history of undermining institutions, a clash seems inevitable.

As economic warning signs intensify, Trump appears unmoved, dismissing evidence that his policies are harming the economy. His conviction in protectionism remains unshaken—while the real world braces for impact.

WORLD
A strategic pause or a tactical trap?

Ukraine’s willingness to consider a ceasefire has put the Kremlin in a tight spot. With Russian forces holding the upper hand, Vladimir Putin faces a critical decision—should he accept a pause in hostilities and risk losing momentum, or reject it and jeopardize fragile diplomatic overtures with the U.S.?

Putin has been firm in his stance: a brief ceasefire would only serve Kyiv and its Western backers, giving them time to regroup and rearm. Instead, he insists on a broader settlement that aligns with Moscow’s long-term interests. The Kremlin’s cautious response to Ukraine’s overture signals an awareness that outright dismissal could disrupt tentative efforts to improve Russia-U.S. relations.

Moscow has the battlefield advantage, making incremental gains across the 1,000-km front. A Ukrainian incursion into Russia’s Kursk region aimed at distracting Russian forces ultimately backfired, stretching Ukrainian resources thin and failing to curb Moscow’s advances. Meanwhile, Russia has systematically targeted Ukraine’s energy infrastructure, crippling its power supply.

Putin’s demands remain largely unchanged from the war’s outset: Ukraine must renounce NATO ambitions, downsize its military, and safeguard Russian cultural and linguistic interests. But now, he also wants Kyiv to withdraw from occupied regions and for Western sanctions on Russia to be lifted. Washington’s signals that sanctions relief might be on the table have only emboldened Moscow’s position.

Rather than rejecting the ceasefire outright, Putin may attach conditions that serve Russian interests. Some analysts speculate he could demand a halt to Western arms supplies to Ukraine or push for a Ukrainian presidential election, which could shift Kyiv’s political landscape in Moscow’s favour.

For Putin, negotiations have already yielded more than months of fighting—delayed U.S. military aid and discussions on sanction relief are victories in themselves. He may not dismiss the ceasefire proposal outright, but any truce that emerges is likely to be on Moscow’s terms. Washington’s role in shaping the outcome could be the decisive factor in where this process ultimately leads.

ECONOMY
U.S. seeks zero auto tariffs in India

The U.S. is urging India to eliminate car import tariffs under a proposed trade deal, but New Delhi remains cautious about slashing duties to zero immediately. With Tesla preparing for an India launch, steep import taxes—up to 110%—have drawn criticism from CEO Elon Musk and U.S. President Donald Trump, who has threatened reciprocal action.

While India hasn’t rejected the demand outright, it is consulting domestic automakers who fear cheaper imports could hurt local manufacturing. A broader trade deal is in the works, aiming for $500 billion in bilateral trade by 2030, but India’s auto tariffs remain a sticking point.