In his current presidency, President Trump's aggressive tariff strategy has significantly impacted financial markets, introducing heightened volatility and uncertainty. The new administration has already introduced unprecedented tariffs within its first two months. Figure 1 provides an overview of currently imposed and threatened tariffs. These tariffs imposed by the US on other countries has also led to significant retaliations from those countries, which exacerbates the issue even further. The fact that the Trump administration also threatens tariffs nearly on a daily basis further bolsters global uncertainty. These tariffs have also disrupted established trade relationships and supply chains, leading to increased costs for businesses and consumers alike. Investors are now grappling with the potential for slower economic growth, as higher import costs contribute to rising inflationary pressures. Market participants also showed some optimism on a Trump administration for the anticipated resolutions of ongoing wars, especially in Israel and the Ukraine. While most successful in Israel, the situation between Russia and Ukraine remains highly unstable. These developments have undermined investor confidence, compelling market participants to reassess risk exposures and seek refuge in more stable assets. Consequently, the financial markets are navigating a complex landscape, where protectionist policies challenge the principles of free trade that have long underpinned global economic growth.

​Over the past weeks, a key election for Europe took place in Germany. Elections turned out as expected with strong gains of the CDU and AfD and heavy losses of the previous ruling coalition. It also showed a significant shift to the right. It is highly likely that the CDU will form a coalition with the SPD to achieve a majority. With a stalling economy, the removal of their “debt brake”, which limits the country to borrow at maximum 0.35% of their GDP, is high on the agenda. In conjunction with Trump’s administration, European countries will likely increase their defence spending over the coming years, as Europe is contributing significantly less to NATO than the US. The new administration in the US is also not slowing down after its highly active start on 20th January 2025. In particular, the proposed and increasingly severe tariffs have caused markets to plunge in the past weeks. Not only are companies hurt directly by countermeasures of other countries, but it also causes significant headache on a return of increasing inflation with already high interest rates.