| I’m Malcolm Scott, international economics enterprise editor in Sydney. Today we’re looking at the hit to the global economy stemming from tariff uncertainty. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X via @economics. And if you aren’t yet signed up to receive this newsletter, you can do so here. - China’s antitrust watchdog is laying the groundwork for a potential probe into Apple. Meanwhile, consumers shattered records for travel and movie attendance during the Lunar New Year holiday.
- In America’s latest trade salvo, the US Postal Service is temporarily suspending inbound international packages from China and Hong Kong.
- The European Central Bank’s main gauge of future euro-zone pay growth continued to signal a sharp slowdown in 2025.
Global commerce was given a last-minute reprieve when President Donald Trump delayed tariffs on Canada and Mexico. And even the 10% levies he slapped on China were mild compared with some of his campaign threats, as were the retaliatory steps taken by Beijing. That doesn’t mean the global economy will be spared from fallout. Ana Galvao and Rana Sajedi of Bloomberg Economics say “the one certainty with US tariffs is uncertainty.” Their new model finds ongoing unease could knock almost 1% off US industrial production by May 2026. As for the global impact, the post-election surge in trade policy uncertainty could curb world trade by 1.6% by the end of the year, they find.hat gels with the experience of Trump’s first trade war — especially for Asia — where the economic blow came more from the hit to business confidence and capital expenditure plans, which in-turn put a damper on employment, rather than the direct impact from tariffs themselves, according to a Feb. 2 report from Morgan Stanley Chief Asia Economist Chetan Ahya. His US colleague Michael Gapen, meantime, warns that “on-again-off-again tariff uncertainty should raise the hurdle for Fed cuts.” Back in December, Bank of Canada Governor Tiff Macklem said the tariff threat was likely dampening business investment in the country. This week’s reprieve may do little to offset that, especially as leaders warn of the high-stakes negotiations ahead. It’s not just financial markets that have been whiplashed by tariff news out of the White House over the past fortnight. Companies too are grappling with a rapidly changing landscape for their supply chains and pricing. Take just one example. On Monday morning, a major US grocery wholesaler sent out a warning to the 1,100 American retailers it sells to: Get ready to pay 25% more for meat, mushrooms, tomatoes and other goods from Mexico and Canada. Six hours later, that dire warning had devolved into a humbled ambivalence: “We do not know what impact, if any, the imposition of tariffs will have on our net cost of goods,” the Associated Wholesale Grocers Inc. told customers in its second memo of the day. Beyond the well-documented economic costs of Trump’s latest tariff salvoes, the “misuse” of the International Emergency Economic Powers Act undermines America’s ability to use economic tools in future, says Philip Luck, director of the Economics Program and Scholl Chair in International Business at the Center for Strategic and International Studies in Washington. “Coercive economic measures are like antibiotics: They are highly effective in targeting specific threats but when overused can lead to diminishing returns,” he writes. “Just as bacteria develop resistance to antibiotics, countries subject to repeated sanctions will develop immunity by diminishing their exposure to the US market.” Live Q&A on the Trump’s EU Tariff Threats | Trump’s threats to hit the EU with tariffs have left the bloc’s leaders scrambling at the prospect of a trade war with the US. Bloomberg’s Caroline Hepker, Alice Gledhill, Kevin Whitelaw and Craig Trudell will discuss how the ramped up protectionist rhetoric could hit markets, the effect it’s already having, how it’s impacting international relations — and what, if anything, Europe can do to prepare for the threat potentially becoming reality. Join our Live Q&A on Feb. 5 at 8 a.m. EST. The Best of Bloomberg Economics | - More than 20,000 employees — about 1% of the US federal workforce — have signed up for an offer to quit their jobs in exchange for a deferred resignation deal.
- Japanese nominal wages rose at the fastest pace in nearly three decades, supporting the Bank of Japan’s latest rate hike decision and keeping the bank on track for further tightening steps.
- Panama is weighing whether to cancel its contract with the Hong Kong-based company that operates ports near the Panama Canal.
- The Bank of Korea predicted inflationary pressure will soon cool after price growth topped consensus in the latest reading.
- Iceland’s central bank delivered a second straight jumbo cut in borrowing costs, with economists expecting Kenya to follow suite later today and Poland to pause.
Taking stock of the whirlwind of trade policy news since Trump took office little more than two weeks ago, Wells Fargo economists said it’s apparent that the president is taking an “escalate to negotiate” approach. “Trump has indeed secured concessions from all” of the nations threatened so far, including Canada, Mexico, Colombia and China, even if no deal has been finalized, economists including Brendan McKenna wrote. “Expect a similar escalate-style approach to discussions with the European Union.” Market access with the EU may be “tricky,” given how such policy is set, they wrote, but stepping up defense spending may prove an easier sell. The Trump team may have a harder time with China. While Beijing may be opting for targeted retaliation for now, it is “unlikely to back down” from a trade war, the team wrote. At a time when China has developed new trade ties and is turning more inward, the incentive for a US deal is a questionable, McKenna and his colleagues wrote. | 
