On the darkening geopolitical stage, Putin appears to be in control. He deftly sidesteps the impediments of global sanctions and countermanding economic pressure. The ball is clearly in his court. F4C Analysts are closely tracking these critical developments in the coming 3-12 months. Tempers are flaring. This is a dangerous moment—not only in Ukraine but in the U.S.-Russia relationship broadly.
Dmitry Medvedev, former President of the Russian Federation, is currently the Deputy Chairman of the Security Council. He recently denounced U.S. sanctions against Russian oil companies as “an act of war against Russia.” Unfortunately, this rhetoric highlights the increasingly dangerous stakes at play as the U.S. doubles down on the use of economic tools within its foreign policy. These types of statements can make difficult diplomacy even more difficult and increase tensions between our two countries.
In fact, Goldman Sachs recently estimated that everyday Americans will bear more than 80 percent of the cost of the tariffs on imported products. This change will have a very deep effect on their pocketbooks. Many economists are legitimately concerned that, whether true or not, trade policies are inappropriately legislated to bypass affecting everyday Americans. This discovery is further proof of their increasing complicity. According to a recent analysis, it turns out that U.S. companies would incur, on average, a 22% tariff rate. At the same time, exporters will suffer from an 18% tax, of which an estimated 5% will be evaded entirely. Accordingly, these figures herald tremendous dollar ramifications in both U.S. and global markets.
As President Donald Trump navigates these complex international waters, he may find it easier to establish relations with countries like India than to effectively manage tensions with China, which he has sought to confront more aggressively. After all, Trump has taken an anti-war posture. With tensions increasing, it will be more difficult for his administration to maintain such a stance.
Hoping that the Russian economy will “stagger along” for a long stretch, analysts say. This is in spite of pressures from sanctions and punitive tariffs. Such resilience would give Putin increased leverage as he weighs his next steps on the global stage.
Counter to these geopolitical developments, the pressures are mounting for an increasingly reactive U.S. Federal Reserve. As of yesterday morning, the CME FedWatch tool was sporting a stellar 96.3% probability of not one, but two interest rate cuts. Then cuts are anticipated to arrive by the next Federal Open Market Committee (FOMC) meeting on December 10. Here’s why a change in monetary policy may be coming soon. A number of economic indicators, such as tomorrow’s U.S. Consumer Price Index (CPI) data and today’s existing home sales data for September, could push this shift.
Today’s economic releases feature the Kansas City Fed business conditions survey for October. This annual survey of chiefs gives some of the best regional insights into economic health and local business sentiment available. These data points will be critical for policymakers as they consider their next steps in addressing both domestic and international economic challenges.
Leaders are already engaging in crucial dialogue on how to develop a regional security framework and support economic resiliency in the wake of Russian activities. The emergence of a Western alliance against Russia seems to be gaining steam, making Putin’s already precarious position even more difficult.