US President Donald Trump praises Hyundai's plans to expand in the US, calling them a vindication of his administration's use of tariffs to pressure foreign manufacturers to create American jobs. Bloomberg
US President Donald Trump praises Hyundai's plans to expand in the US, calling them a vindication of his administration's use of tariffs to pressure foreign manufacturers to create American jobs. Bloomberg
US President Donald Trump praises Hyundai's plans to expand in the US, calling them a vindication of his administration's use of tariffs to pressure foreign manufacturers to create American jobs. Bloomberg
US President Donald Trump praises Hyundai's plans to expand in the US, calling them a vindication of his administration's use of tariffs to pressure foreign manufacturers to create American jobs. Bloo

Why corporate strategy must adapt to shifting US trade policies


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Comparatively high US interest rates, erratic trade policies and market jitters are clouding corporate decision-making around the world. While there have been rate cuts in China and Europe, the US remains the wild card. President Donald Trump’s tariffs, spending cuts, federal layoffs and mixed signals on the dollar are fuelling uncertainty for corporations.

So, how do businesses plan when the rules keep changing?

Elsewhere, the picture is clearer. China’s latest data shows a return to consumer price deflation – meaning Beijing is unlikely to raise rates and may cut them further. The country’s consumer price index fell by 0.7 per cent in February, a sharper drop than the 0.4 per cent decline economists had predicted in a Bloomberg poll.

China’s central bank governor Pan Gongsheng recently reiterated that a rate cut is on the table for 2025.

The European Central Bank has already done so, hoping to jolt its sluggish economy back to life with a 0.25 per cent cut in its benchmark rate on March 6.

But there’s a problem. German government bond yields have jumped on expectations of a historic surge in borrowing – a sign that investors are nervous. Higher yields mean borrowing costs are rising, which could work against the ECB’s push for lower rates.

The real wild card is the US, where Mr Trump’s aggressive trade agenda is rattling investors. The post-election equity rally has lost steam, wiping out the gains sparked by Mr Trump’s victory over Kamala Harris in November.

His latest tariffs on trading partners – especially steep rises on metals like aluminium from this week – could fuel inflation in the short term, stoking up fears of a US recession. The American economy is expected to shrink by 2.4 per cent in the first quarter of 2025, according to the latest estimate from the Atlanta Fed.

Then, there’s the spillover effect from Mr Trump’s plan to reduce the federal workforce, with Tesla and SpaceX chief executive Elon Musk leading the cost-cutting drive through his Department of Government Efficiency (Doge) initiative. The cuts are meant to rein in spending, but they could send shock waves through the broader economy.

When federal agencies tighten budgets, private sector suppliers reliant on government contracts – defence contractors, construction firms, tech companies, healthcare providers – take a hit. That means lower revenue, the threat of layoffs and lower consumption. Over time, that dampens inflation as companies lose pricing power.

Mr Trump’s erratic policymaking – swinging between dramatic escalations and abrupt reversals – deepens the uncertainty, making it hard for businesses to plan ahead. The President put a 25 per cent tariff on imports from Canada and Mexico last week, only to reverse course days later.

Businesses are frustrated by the lack of clarity on tariffs, which have already disrupted markets, forcing companies to stockpile materials, rethink operations and brace for price rises.

And that is the real threat: uncertainty. When consumers do not know what is coming, they spend less, and when businesses cannot predict the future, they freeze investment. The result can be a slowdown that pushes the US economy closer to recession.

Recent data has missed forecasts, signalling a slowdown in consumer spending, the US economy’s core driver. Nominal personal spending dropped 0.2 per cent from December to January, marking the sharpest decline since early 2021.

The ISM manufacturing index stayed positive in February, but a steep drop in new orders signals the possibility of disruptions ahead as Mr Trump’s trade war takes shape.

As signs of slowing economic growth increase, US inflation cooled more than expected to 2.8 per cent in February, strengthening the case for Federal Reserve rate cuts.

But unemployment rose slightly to 4.1 per cent, from 4.0 per cent in February. A weaker-than-expected jobs report revealed the US economy added 151,000 jobs last month, falling short of forecasts.

And the latest data does not fully capture the extent of federal layoffs. Since the start of Mr Trump’s second term, tens of thousands of government jobs have been cut as part of a push to reduce federal spending, with more on the horizon.

If these job losses persist or increase, consumer demand could take a further hit – strengthening the case for Fed rate cuts to prop up economic activity.

Unlike the ECB, the Fed has a dual mandate: keep inflation in check while ensuring a strong job market. Fed Chairman Jerome Powell must decide what is the bigger threat – rising prices or rising job losses.

Businesses are holding back on investment, partly because Mr Trump’s chaotic tariff rollouts have made future earnings harder to predict
Karl Schmedders

For now, markets expect the Fed to hold off on cuts until June. But if unemployment keeps climbing, the pressure to ease could come sooner.

Even if rate cuts are on the horizon, the real problem for companies is not just the relatively high cost of capital but the uncertainty surrounding future cash flows.

Businesses are holding back on investment, partly because Mr Trump’s chaotic tariff roll-outs have made earnings harder to predict. S&P Global Ratings expects global capital expenditure growth to slow to 4.2 per cent in 2025, down from 5.5 per cent in 2024, a clear sign that companies are thinking twice before committing to long-term spending.

When companies weigh investments, they discount future cash flows to determine what those earnings are worth today. But when uncertainty rises, those future earnings can shrink in value, making investment far riskier.

Even if the Fed cuts rates this summer, refinancing will not be as simple as locking in cheaper debt – companies need confidence that their future revenue can support new borrowing. Right now, the real risk is not the cost of capital, it is the unpredictability of cash flows.

Another major risk for global corporations is the volatility of the US dollar. As the world’s reserve currency, the greenback’s value impacts global trade, debt and corporate earnings. Sharp fluctuations can disrupt supply chains and push companies to reassess their currency hedging strategies.

But the US is sending conflicting messages about the dollar, making it harder for businesses to gauge currency risk. Mr Trump touts a strong dollar as a sign of US economic power but wants it weaker to boost exports and shrink the trade deficit. His “buy American” policy relies on a cheaper dollar making US goods more competitive in global markets, driving up foreign demand.

At the same time, his tariffs push up import prices, making foreign goods less attractive and steering demand towards domestic producers. This mix of currency policy and trade barriers is meant to protect US industries, but it also fuels uncertainty for global businesses.

If currency markets become more volatile, companies that skipped hedging to save costs could be at risk, forcing them to rethink their strategy before sudden swings hit their bottom line.

For corporate leaders, cutting costs is only part of the challenge – they must do it while the ground keeps shifting. With interest rates, trade policies and currency markets in flux, standing still is not an option. The companies that succeed will not be the ones just waiting for rate cuts.

Karl Schmedders is professor of finance at IMD

While you're here
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Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra

Rating: 4/5

 

MATCH INFO

Manchester United 1 (Rashford 36')

Liverpool 1 (Lallana 84')

Man of the match: Marcus Rashford (Manchester United)

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Electoral College Victory

Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate. 

 

Popular Vote Tally

The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.

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Essentials

The flights
Etihad and Emirates fly direct from the UAE to Delhi from about Dh950 return including taxes.
The hotels
Double rooms at Tijara Fort-Palace cost from 6,670 rupees (Dh377), including breakfast.
Doubles at Fort Bishangarh cost from 29,030 rupees (Dh1,641), including breakfast. Doubles at Narendra Bhawan cost from 15,360 rupees (Dh869). Doubles at Chanoud Garh cost from 19,840 rupees (Dh1,122), full board. Doubles at Fort Begu cost from 10,000 rupees (Dh565), including breakfast.
The tours 
Amar Grover travelled with Wild Frontiers. A tailor-made, nine-day itinerary via New Delhi, with one night in Tijara and two nights in each of the remaining properties, including car/driver, costs from £1,445 (Dh6,968) per person.

The biog

Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball

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Director: Ed Perkins

Stars: Alex and Marcus Lewis

Four stars

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Sand storm

  • Particle size: Larger, heavier sand grains
  • Visibility: Often dramatic with thick "walls" of sand
  • Duration: Short-lived, typically localised
  • Travel distance: Limited 
  • Source: Open desert areas with strong winds

Dust storm

  • Particle size: Much finer, lightweight particles
  • Visibility: Hazy skies but less intense
  • Duration: Can linger for days
  • Travel distance: Long-range, up to thousands of kilometres
  • Source: Can be carried from distant regions
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  • Individuals must register on UAE Drone app or website using their UAE Pass
  • Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
  • Upload the training certificate from a centre accredited by the GCAA
  • Submit their request
What are the regulations?
  • Fly it within visual line of sight
  • Never over populated areas
  • Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
  • Users must avoid flying over restricted areas listed on the UAE Drone app
  • Only fly the drone during the day, and never at night
  • Should have a live feed of the drone flight
  • Drones must weigh 5 kg or less
The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

Federer's 11 Wimbledon finals

2003 Beat Mark Philippoussis

2004 Beat Andy Roddick

2005 Beat Andy Roddick

2006 Beat Rafael Nadal

2007 Beat Rafael Nadal

2008 Lost to Rafael Nadal

2009 Beat Andy Roddick

2012 Beat Andy Murray

2014 Lost to Novak Djokovic

2015 Lost to Novak Djokovic

2017 Beat Marin Cilic

MATCH INFO

Chelsea 3 (Abraham 11', 17', 74')

Luton Town 1 (Clark 30')

Man of the match Abraham (Chelsea)

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One in four Americans don't plan to retire

Nearly a quarter of Americans say they never plan to retire, according to a poll that suggests a disconnection between individuals' retirement plans and the realities of ageing in the workforce.

Experts say illness, injury, layoffs and caregiving responsibilities often force older workers to leave their jobs sooner than they'd like.

According to the poll from The Associated Press-NORC Centre for Public Affairs Research, 23 per cent of workers, including nearly two in 10 of those over 50, don't expect to stop working. Roughly another quarter of Americans say they will continue working beyond their 65th birthday.

According to government data, about one in five people 65 and older was working or actively looking for a job in June. The study surveyed 1,423 adults in February this year.

For many, money has a lot to do with the decision to keep working.

"The average retirement age that we see in the data has gone up a little bit, but it hasn't gone up that much," says Anqi Chen, assistant director of savings research at the Centre for Retirement Research at Boston College. "So people have to live in retirement much longer, and they may not have enough assets to support themselves in retirement."

When asked how financially comfortable they feel about retirement, 14 per cent of Americans under the age of 50 and 29 per cent over 50 say they feel extremely or very prepared, according to the poll. About another four in 10 older adults say they do feel somewhat prepared, while just about one-third feel unprepared. 

"One of the things about thinking about never retiring is that you didn't save a whole lot of money," says Ronni Bennett, 78, who was pushed out of her job as a New York City-based website editor at 63.

She searched for work in the immediate aftermath of her layoff, a process she describes as akin to "banging my head against a wall." Finding Manhattan too expensive without a steady stream of income, she eventually moved to Portland, Maine. A few years later, she moved again, to Lake Oswego, Oregon. "Sometimes I fantasise that if I win the lottery, I'd go back to New York," says Ms Bennett.

 

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Updated: March 28, 2025, 6:00 AM`