The Eurozone experienced a slight widening of its trade surplus with the United States in January. This development comes amid a backdrop of geopolitical tensions and the looming threat of a trade war, creating a highly uncertain outlook for 2025. The latest trade data shows both exports and imports reaching their strongest levels in over a year, with exports increasing by €2.7 billion and imports by €2.6 billion.
New export orders are finally showing signs of bottoming out, offering a glimmer of hope in an otherwise turbulent economic environment. However, the anticipation of increased tariffs could potentially disrupt international trade significantly in the coming months, adding to the uncertainty surrounding the trade balance.
The Eurozone has faced a period of weak demand for European goods abroad and lackluster domestic demand over the past year. Consumers have shown frugality, while investment has remained slow. Despite these challenges, the January trade data reflects some decent increases in exports and imports, although seasonally-adjusted data indicates that imports have increased more than exports.
Gold has benefited from escalating geopolitical tensions, extending its rally to a new record high above $3,030 in the American session on Tuesday. This surge underscores the market's reaction to the current geopolitical climate.
John Maynard Keynes, in a 1933 article on national self-sufficiency, advised caution for those seeking to disentangle a country from its engagements. He illustrated this with an image of a country being disembarrassed from its entanglements.
“It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction,” he stated, emphasizing the need for gradual adaptation.
The Trump-Putin call is also being closely watched as it holds potential implications for global trade dynamics. Meanwhile, some anticipation effects of the tariff war are already observable in the US trade data.
The outlook for 2025 remains fraught with uncertainty due to the ongoing trade war concerns. The potential imposition of tariffs could have far-reaching consequences for international trade, creating further challenges for the Eurozone's economic stability.