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
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
The specs: Macan Turbo
Engine: Dual synchronous electric motors
Power: 639hp
Torque: 1,130Nm
Transmission: Single-speed automatic
Touring range: 591km
Price: From Dh412,500
On sale: Deliveries start in October
UAE currency: the story behind the money in your pockets
if you go
The flights
Direct flights from the UAE to the Nepalese capital, Kathmandu, are available with Air Arabia, (www.airarabia.com) Fly Dubai (www.flydubai.com) or Etihad (www.etihad.com) from Dh1,200 return including taxes. The trek described here started from Jomson, but there are many other start and end point variations depending on how you tailor your trek. To get to Jomson from Kathmandu you must first fly to the lake-side resort town of Pokhara with either Buddha Air (www.buddhaair.com) or Yeti Airlines (www.yetiairlines.com). Both charge around US$240 (Dh880) return. From Pokhara there are early morning flights to Jomson with Yeti Airlines or Simrik Airlines (www.simrikairlines.com) for around US$220 (Dh800) return.
The trek
Restricted area permits (US$500 per person) are required for trekking in the Upper Mustang area. The challenging Meso Kanto pass between Tilcho Lake and Jomson should not be attempted by those without a lot of mountain experience and a good support team. An excellent trekking company with good knowledge of Upper Mustang, the Annaurpuna Circuit and Tilcho Lake area and who can help organise a version of the trek described here is the Nepal-UK run Snow Cat Travel (www.snowcattravel.com). Prices vary widely depending on accommodation types and the level of assistance required.
Company info
Company name: Entrupy
Co-founders: Vidyuth Srinivasan, co-founder/chief executive, Ashlesh Sharma, co-founder/chief technology officer, Lakshmi Subramanian, co-founder/chief scientist
Based: New York, New York
Sector/About: Entrupy is a hardware-enabled SaaS company whose mission is to protect businesses, borders and consumers from transactions involving counterfeit goods.
Initial investment/Investors: Entrupy secured a $2.6m Series A funding round in 2017. The round was led by Tokyo-based Digital Garage and Daiwa Securities Group's jointly established venture arm, DG Lab Fund I Investment Limited Partnership, along with Zach Coelius.
Total customers: Entrupy’s customers include hundreds of secondary resellers, marketplaces and other retail organisations around the world. They are also testing with shipping companies as well as customs agencies to stop fake items from reaching the market in the first place.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
More from our neighbourhood series:
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Killing of Qassem Suleimani
The Bio
Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
Financial considerations before buying a property
Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.
“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says.
Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.
Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier.
THE DETAILS
Kaala
Dir: Pa. Ranjith
Starring: Rajinikanth, Huma Qureshi, Easwari Rao, Nana Patekar
Rating: 1.5/5
Company%20Profile
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Killing of Qassem Suleimani
THREE
%3Cp%3EDirector%3A%20Nayla%20Al%20Khaja%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Jefferson%20Hall%2C%20Faten%20Ahmed%2C%20Noura%20Alabed%2C%20Saud%20Alzarooni%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%206-cylinder%203-litre%2C%20with%20petrol%20and%20diesel%20variants%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E8-speed%20automatic%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20286hp%20(petrol)%2C%20249hp%20(diesel)%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E450Nm%20(petrol)%2C%20550Nm%20(diesel)%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EStarting%20at%20%2469%2C800%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%3C%2Fp%3E%0A
Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
Roll%20of%20Honour%2C%20men%E2%80%99s%20domestic%20rugby%20season
%3Cp%3E%3Cstrong%3EWest%20Asia%20Premiership%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Tigers%0D%3Cbr%3ERunners%20up%3A%20Bahrain%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EUAE%20Premiership%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Jebel%20Ali%20Dragons%0D%3Cbr%3ERunners%20up%3A%20Dubai%20Hurricanes%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EUAE%20Division%201%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Sharks%0D%3Cbr%3ERunners%20up%3A%20Abu%20Dhabi%20Harlequins%20II%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EUAE%20Division%202%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Tigers%20III%0D%3Cbr%3ERunners%20up%3A%20Dubai%20Sharks%20II%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EDubai%20Sevens%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Tigers%0D%3Cbr%3ERunners%20up%3A%20Dubai%20Hurricanes%3C%2Fp%3E%0A
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
The biog
DOB: March 13, 1987
Place of birth: Jeddah, Saudi Arabia but lived in Virginia in the US and raised in Lebanon
School: ACS in Lebanon
University: BSA in Graphic Design at the American University of Beirut
MSA in Design Entrepreneurship at the School of Visual Arts in New York City
Nationality: Lebanese
Status: Single
Favourite thing to do: I really enjoy cycling, I was a participant in Cycling for Gaza for the second time this year
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Sav%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Purvi%20Munot%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20FinTech%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%24750%2C000%20as%20of%20March%202023%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Angel%20investors%3C%2Fp%3E%0A
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
