Neil Shearing has been in back-to-back meetings with global institutions who – like everyone – are trying to make sense of Trump’s chaotic trade policy roll-out, not least the recent decision to pause "reciprocal" tariffs for 90 days. The Group Chief Economist at Capital Economics joins the latest episode of The Weekly Briefing to address some of the questions that have kept coming up in those sit-downs with clients, including:
Analysis referenced in this episode:
Read: Will tariffs drive a flood of Chinese exports elsewhere?
https://www.capitaleconomics.com/publications/global-economics-focus/will-tariffs-drive-flood-chinese-exports-elsewhere
Read: Is China offloading its dollar assets?
https://www.capitaleconomics.com/publications/china-economics-focus/china-offloading-its-dollar-assets
Data: Tariff Impact Model (TIM)
https://www.capitaleconomics.com/data-and-charts/tariff-impact-model
Read: US Outlook - Scaled-back tariffs not an existential threat
https://www.capitaleconomics.com/publications/us-economic-outlook/scaled-back-tariffs-not-existential-threat
Read: ECB Policy Announcement (April 2025)
https://www.capitaleconomics.com/publications/europe-rapid-response/ecb-policy-announcement-april-2025
As the dust settles after another of week of dramatic policy shifts, the picture that has emerged is a familiar one from Trump's first term: China is the main target after all. China isn't taking Trump's tariffs lying down. Instead, it has hit back tariff for tariff so that both sides are now applying tariffs to each others' goods of well above 100%.
In this week's episode, Group Chief Economist Neil Shearing asks Mark Williams, our Chief Asia Economist, why China is adopting a more combative approach to Donald Trump than other countries and what that suggests about the future of the relationship. Chief Global Economist Jennifer McKeown offers some scenarios for what might happen next with tariffs and their impact on growth across the global economy. And the team cast their eyes further ahead to discuss whether the tumult of the last couple of weeks may end up accelerating the fracturing of the global economy into US and China-aligned blocs or instead drive more former US allies closer to China.
Events and analysis referenced in this podcast:
Read: Mapping out trade war scenarios
Mapping out trade war scenarios | Capital Economics
Read: China and US still in an escalatory loop
China and US still in an escalatory loop | Capital Economics
Meet: TIM - the Capital Economics Tariff Impact Model
Tariff Impact Model | Capital Economics
Watch: The escalating trade war and its economic and market effects
Drop-In: The escalating trade war and its economic and market effects | Capital Economics
At the end of one of Lenin’s “weeks when decades happen”, senior economists from Capital Economics briefed clients on the implications of the news that China is retaliating aggressively to Donald Trump's reciprocal tariffs plan, including whether Europe could follow suit and how much more pain is in store for markets.
In this edited extract from that briefing, Neil Shearing, Mark Williams, Andrew Kenningham and Jonas Goltermann tackle everything from what China has just done to why the dollar has been acting strangely to what could push Brussels to fight back hard against the White House's reciprocal tariffs.
Events and analysis referenced in this podcast:
Watch: Trump’s reciprocal tariffs – China retaliates and the market’s response
https://www.capitaleconomics.com/events/drop-trumps-reciprocal-tariffs-china-retaliates-and-markets-response
Read: China hits back, hard
https://www.capitaleconomics.com/publications/china-economics-update/china-hits-back-hard
Read: Answering your questions about Liberation Day tariffs
https://www.capitaleconomics.com/publications/global-economics-update/answering-your-questions-about-liberation-day-tariffs
There’s a “whiff of stagflation” around the US economy – and that’s even before Donald Trump rolls out his reciprocal tariffs plan.
Group Chief Economist Neil Shearing hops off a plane from New York and onto The Weekly Briefing from Capital Economics to give his take on the latest US consumption and price data, to preview March payrolls and to talk about what this all means for the US and global macro outlook. He’s joined by Jonas Goltermann, our Deputy Chief Markets Economist, who explains what all of this means for US markets exceptionalism.
Also on this week’s episode, our China Activity Proxy is our long-running proprietary read of what’s really happening with Chinese economic activity. Leah Fahy from our China team is on to discuss what the latest read of this widely followed indicator says about the trajectory for Chinese growth in 2025.
Analysis referenced in this episode
The beginning of the end of US exceptionalism?
https://www.capitaleconomics.com/publications/asset-allocation-update/beginning-end-us-exceptionalism
Global Economic Outlook: Trade war to dampen, not derail, global growth
https://www.capitaleconomics.com/publications/global-economic-outlook/global-economic-outlook-trade-war-dampen-not-derail-global
Data: China Activity Proxy
https://www.capitaleconomics.com/data-and-charts/china-activity-proxy
CAP: Weak start to the year for China’s economy
https://www.capitaleconomics.com/publications/china-activity-monitor/cap-weak-start-year-chinas-economy
Could a ‘Mar-a-Lago Accord’ fix what ails the US balance of payments? Group Chief Economist Neil Shearing is on the show this week to tackle the various ideas around what the Trump administration could do to address long-standing global imbalances. He also warns that uncertainty around the Trump trade agenda may not dissipate with the release of the reciprocal tariffs plan on 2nd April and explains how this is all feeding into central bank uncertainty about the policy path ahead.
Also on the show, Deputy Chief UK Economist Ruth Gregory talks about what to expect from Rachel Reeves’ upcoming fiscal statement, but also discusses the Chancellor’s spending challenges in a more dangerous world that demands a forceful UK security posture.
And Senior EM Economist Liam Peach explains resurgent risks around Turkey’s economy and markets after the arrest of President Erdogan’s key political rival plunged the country back into crisis.
Analysis and events referenced in this episode:
Europe Outlook: Zeitenwende!
https://www.capitaleconomics.com/publications/europe-economic-outlook/europe-outlook-zeitenwende
Global Drop-In: The Fed, ECB and Bank of England March meetings
https://www.capitaleconomics.com/events/global-drop-fed-ecb-and-bank-england-march-meetings
UK Drop-In: Spring Fiscal Forecast reaction – Macro and market implications of Reeves’ statement
https://www.capitaleconomics.com/events/uk-drop-spring-fiscal-forecast-reaction-macro-and-market-implications-reeves-statement
Data: UK Employment Indicator
https://www.capitaleconomics.com/data-and-charts/uk-employment-indicator
Emerging Europe Weekly: Turkey fallout, Polish rate outlook
https://www.capitaleconomics.com/publications/emerging-europe-economics-weekly/emerging-europe-weekly-turkey-fallout-polish-rate
Group Chief Economist Neil Shearing discusses what the latest signals from the US economy say about recession risk. He talks about what the coming week’s retail sales data might say, and how they might swing the debate around a downturn. Neil also previews the coming week’s Fed decision, a haul of start-of-the-year China data and explains why talk of increased defence spending won’t mean an automatic boost for economies.
Also on the show, Senior Global Economist Ariane Curtis talks about why we don’t think Donald Trump’s policy agenda will have an impact on the global economy over the long term. She talks about how the ranking of the top 10 biggest economies could change between now and 2050 and which are set to benefit most from the rollout of AI.
Analysis and events referenced in this episode:
Event: Drop-In - The Fed, ECB and Bank of England March meetings
https://www.capitaleconomics.com/events/global-drop-fed-ecb-and-bank-england-march-meetings
Data: China Activity Proxy
https://www.capitaleconomics.com/data-and-charts/china-activity-proxy
Read: Will defence spending turbocharge economic growth?
https://www.capitaleconomics.com/publications/global-economics-focus/will-defence-spending-turbocharge-economic-growth
Drop-In: Is US equities exceptionalism dead?
https://www.capitaleconomics.com/events/drop-us-equities-exceptionalism-dead
Read: Global megatrends will outweigh Trump disruption
https://www.capitaleconomics.com/publications/long-run-economic-outlook/global-megatrends-will-outweigh-trump-disruption
In light of Donald Trump's decision to push the button on tariffs on China, Mexico and Canada, Group Chief Economist Neil Shearing joins a special episode of the Weekly Briefing from Capital Economics to talk about whether this signals the start of a global trade war. He also discusses what’s coming next and whether signs of US economic weakness could prompt a shift in the White House's trade strategy.
China Economics Head Julian Evans-Pritchard, Deputy Chief North America Economist Stephen Brown and Chief EM Economist William Jackson are also on the show to talk about the economic implications for China, Canada and Mexico, and how their governments might respond.
Events referenced in this episode:
Global Drop-In: Trump tariffs hit China, Mexico and Canada – Macro and market implications
https://www.capitaleconomics.com/events/global-drop-trump-tariffs-hit-china-mexico-and-canada-macro-and-market-implications
China Drop-In: 2025 NPC – Setting policy goals in a trickier global environment
https://www.capitaleconomics.com/events/china-drop-2025-npc-setting-policy-goals-trickier-global-environment
In the latest Capital Economics Weekly Briefing, Group Chief Economist Neil Shearing breaks down just how the policy uncertainty emanating from the Trump administration is – and isn’t affecting – the global economy. He also previews the February US employment report and whether Musk’s layoffs will impact the national labour market and the opening of this year’s National People’s Congress in Beijing.
Also on the show, what’s the view of Trump’s tariff threats from India? Deputy Chief EM Economist Shilan Shah calls from Mumbai after a week of meetings with business, government and media to talk about why Narendra Modi’s administration thinks it can dodge this bullet, as well as the macro environment and RBI response.
Analysis and events referenced in this episode:
Could uncertainty weigh on the global economy?
https://www.capitaleconomics.com/publications/global-economics-update/could-uncertainty-weigh-global-economy
China Drop-In: 2025 NPC – Setting policy goals in a trickier global environment
https://www.capitaleconomics.com/events/china-drop-2025-npc-setting-policy-goals-trickier-global-environment
CAP: Official data underplays China’s 2024 weakness
https://www.capitaleconomics.com/publications/china-activity-monitor/cap-official-data-underplays-chinas-2024-weakness
India Weekly: Tariff manoeuvres, RBI shifts priorities, the long-run view
https://www.capitaleconomics.com/publications/india-economics-weekly/india-weekly-tariff-manoeuvres-rbi-shifts-priorities-long-run
It's been an extraordinary week in geopolitics, with direct US-Russia talks, a war of words between Washington and Kyiv and Europe swept by fears about the end of the US security backstop. But how much has really changed?
Group Chief Economist Neil Shearing and Chief Europe Economist Andrew Kenningham are on the Weekly Briefing from Capital Economics to talk about separating the reality from the headlines. They discuss intensifying strains between the US and Europe, the constraints on any breakdown in relations, global economic fracturing and the outlook for European defence spending and how it will be funded.
Also this week, in an exclusive excerpt from our recent client briefing on the issues around the Ukraine war, Senior EM Economist Liam Peach talks about what a potential peace deal could mean for the region’s economies and how US-Russia relations are set to evolve.
Analysis and events referenced in this episode:
Explore: Global economic fracturing
https://www.capitaleconomics.com/key-issues/fracturing-global-economy
Drop-In: German election 2025 – The new government’s domestic and global challenges
https://www.capitaleconomics.com/events/drop-german-election-2025-new-governments-domestic-and-global-challenges
EM Drop-in: EM financial risk update – The state of sovereign, bank and FX vulnerabilities
https://www.capitaleconomics.com/events/em-drop-em-financial-risk-update-state-sovereign-bank-and-fx-vulnerabilities
Why did markets greet the latest White House tariffs announcement so warmly? Deputy Chief Markets Economist Jonas Goltermann is on The Weekly Briefing from Capital Economics to talk about the influence of Donald Trump’s reciprocal tariffs plan on investor sentiment and discuss where the much-vaunted 'Trump trade' goes from here.
The episode’s main item is all about Germany. With voters in the euro-zone’s biggest economy heading to the polls on 23rd February, Andrew Kenningham and Elias Hilmer from our Europe team talk about what the next government could look like. They address whether the anticipated governing coalition will have the appetite to overhaul the country’s stalled growth model, and how Germany will fare in a world increasingly shaped by Donald Trump, Vladimir Putin and Xi Jinping.
Analysis and data referenced in this episode:
Euro-zone Drop-In: German election 2025 – Macro and market implications
https://www.capitaleconomics.com/events/euro-zone-drop-german-election-2025-macro-and-market-implications
German economy post-election: from bad to not much better
https://www.capitaleconomics.com/publications/europe-economics-focus/german-economy-post-election-bad-not-much-better
Data: Euro-zone Debt Sustainability Monitor
https://www.capitaleconomics.com/data-and-charts/euro-zone-debt-sustainability-monitor
The slow agony of Germany’s auto industry
https://www.capitaleconomics.com/publications/europe-economics-focus/slow-agony-germanys-auto-industry
It’s been a drama-filled week in Trumpland and Group Chief Economist Neil Shearing is on The Weekly Briefing from Capital Economics to take stock of what happened, what didn’t happen, and the implications for macro and markets.
As well as discussing the lessons learned from Donald Trump’s trade actions so far, Neil reviews the latest US labour market data and talks about why Europe and the US appear to be on such divergent economic paths.
Also on the episode, China Economist Leah Fahy talks to Deputy Chief EM Economist Shilan Shah about her striking new analysis which shows how China is taking market share from low-end EM manufacturers, upending a long-standing theory about how these economies industrialise in the process.
Events and analysis referenced in this episode:
EMs and the suspension of US aid
https://www.capitaleconomics.com/publications/emerging-markets-economics-update/ems-and-suspension-us-aid
Drop In: Global Inflation Watch - How US and EU inflation paths are diverging
https://www.capitaleconomics.com/events/drop-global-inflation-watch-how-us-and-eu-inflation-paths-are-diverging
Commodities Drop-In: Trump tariffs and global commodities markets
https://www.capitaleconomics.com/events/commodities-drop-trump-tariffs-and-global-commodities-markets
Donald Trump ended weeks of speculation on Saturday with the formal announcement of 25% tariffs on Canada and Mexico, and 10% on China. As those countries respond, Group Chief Economist Neil Shearing joins David Wilder on this special episode of The Weekly Briefing from Capital Economics to talk about whether this marks the beginning of a global trade war.
Neil addresses the immediate economic threats to Canada and Mexico, but also explains why these tariffs end the chance of any more rate cuts from the Fed. He also discusses what further action Trump could take against US trade partners – not least China – and the broader risks to the global trading environment.
For more on the Trump policy agenda and its macro implications, see this dedicated page:
https://www.capitaleconomics.com/key-issues/trumps-second-term
Donald Trump unsurprisingly dominated the news cycle in his first week back in office. To make sense of some of what the president has pledged, threatened and suggested so far, Group Chief Economist Neil Shearing was on The Weekly Briefing from Capital Economics to discuss what we know about tariffs, how global central banks are meant to navigate this more uncertain new environment and whether the Fed is in for a particularly contentious relationship with the White House.
Plus, the new president has already made a big splash in oil markets, including an Inauguration Day pledge to “drill baby, drill” and a call for Saudi Arabia to lower prices. David Oxley, Kieran Tompkins, Olivia Cross and Hamad Hussain from our Commodities and Climate team address the issues that Trump has raised around oil and explain why downside risks to prices have just grown.
Analysis and events referenced in this episode:
Central Bank Hub
https://www.capitaleconomics.com/data-and-charts/central-bank-hub
Read: Strong dollar is a problem for tomorrow
https://www.capitaleconomics.com/publications/global-economics-focus/strong-dollar-problem-tomorrow
Event: Fed, ECB and BoE – Unpacking the first rate decisions of 2025
https://www.capitaleconomics.com/events/drop-fed-ecb-and-boe-unpacking-first-rate-decisions-2025
Read: What to make of Trump’s National Energy Emergency?
https://www.capitaleconomics.com/publications/commodities-focus/what-make-trumps-national-energy-emergency
Read: How low could oil prices go if Saudi open the oil taps?
https://www.capitaleconomics.com/publications/commodities-update/how-low-could-oil-prices-go-if-saudi-open-oil-taps
Group Chief Economist Neil Shearing calls in from Singapore to The Weekly Briefing from Capital Economics to talk about what’s known and unknown about Donald Trump’s policy agenda just days before he is sworn in again. He discusses the tone set by Trump's first inaugural address, what we've learned from recent confirmation hearings and the inflation impact of a gradual rise in tariffs. Neil also talks about why our China Activity Proxy is telling a different story from official Chinese GDP data and explains why the UK has so much potential in the AI revolution.
Also on the show, fresh from his team being named most accurate forecaster of major global stock indices by LSEG Data & Analytics for a second straight year, Chief Markets Economist John Higgins talks about why we expect 2025 to be another strong year for US equities.
Analysis and events referenced in this episode:
CAP: Weaker fiscal support behind growth slowdown
https://www.capitaleconomics.com/publications/china-activity-monitor/cap-weaker-fiscal-support-behind-growth-slowdown
US continues to lead the way on our AI index
https://www.capitaleconomics.com/publications/global-economics-update/us-continues-lead-way-our-ai-index
US Drop-In: Inauguration Day special – Knowns and unknowns around Trump’s second term
https://www.capitaleconomics.com/events/us-drop-inauguration-day-special-knowns-and-unknowns-around-trumps-second-term
Why we expect the S&P 500 to thrive in 2025
https://www.capitaleconomics.com/publications/equities-focus/why-we-expect-sp-500-thrive-2025
A grim week for bonds was capped by a stunningly hot US jobs report. Group Chief Economist Neil Shearing and Deputy Chief Markets Economist Jonas Goltermann joined the first episode of The Weekly Briefing from Capital Economics of the year to explain what these jobs numbers signal about the health of the US economy and how the Fed could respond.
They also discuss the fall-out in global bond markets, including why gilts have been under particular pressure despite the Labour government’s efforts to prove its fiscal bona fides with the investors.
Analysis and events referenced in this episode:
UK Weekly: Gilt market is not in crisis, but it does cause problems
https://www.capitaleconomics.com/publications/uk-economics-weekly/gilt-market-not-crisis-it-does-cause-problems
China Weekly: More weakness in store for the renminbi
https://www.capitaleconomics.com/publications/china-economics-weekly/china-weekly-more-weakness-store-renminbi
Capital Economics events
https://www.capitaleconomics.com/events
The final Weekly Briefing from Capital Economics of the year has Group Chief Economist Neil Shearing making sense of that December Federal Reserve meeting and explaining what the latest PCE data say about the inflation outlook and where rates are heading in 2025. He also addresses why hopes for a sweeping ‘Mar-a-Lago accord’ (or 'Plaza Accord 2.0') that would tackle US-China currency imbalances are likely to be disappointed.
Plus, a dramatic plunge in the value of Brazil’s real shows how far investors have fallen out with Lula’s spendthrift administration. In an exclusive clip from our client briefing on Brazil’s crisis, William Jackson, Jason Tuvey and Jonas Goltermann discuss the real’s fair value, the effectiveness of FX intervention and what the government needs to do to get investors back onside.
Events and analysis referenced in this episode:
The Fracturing of the Global Economy
https://www.capitaleconomics.com/key-issues/fracturing-global-economy
Data: Bank of England Caseometer
https://www.capitaleconomics.com/data-and-charts/bank-england-caseometer
EM Drop-In: Brazil’s currency crisis – Economic and market implications
https://www.capitaleconomics.com/events/em-drop-brazils-currency-crisis-economic-and-market-implications
Data: EM Financial Risk Indicators
https://www.capitaleconomics.com/data-and-charts/em-financial-risk-indicators
In the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing outlines the three big policy quandaries facing three big DM central banks. He unpacks the ECB’s December decision, previews the upcoming Fed and Bank of England meetings and talks about which of these institutions faces the greatest risks in 2025.
Neil also talks about whether China’s policy pivot will translate into meaningful efforts to support and rebalance the economy, discusses what events in Syria say about geopolitics and the macro narrative and highlights a key risk for the coming year.
Plus, following our dive into the big macro themes for 2025, Chief Markets Economist John Higgins is on the show to talk about the financial markets outlook – including why we think a bubble in US equities will keep inflating over the coming year.
Analysis and events referenced in this episode:
Drop-In: The Fed, ECB and BoE December meetings and the 2025 policy outlook
https://www.capitaleconomics.com/events/drop-fed-ecb-and-boe-december-meetings-and-2025-policy-outlook
Latest quarterly Outlooks
https://www.capitaleconomics.com/outlooks
Week-ahead Forecasts
https://www.capitaleconomics.com/data-and-charts/week-ahead-forecasts
This is a special episode of The Weekly Briefing from Capital Economics all about the themes that will shape the global economy in 2025. Group Chief Economist Neil Shearing and Chief Global Economist Jennifer McKeown stepped out of our client event in London on 4th December to talk to David Wilder about the 2025 growth story.
They discussed how Donald Trump’s policy pledges will – and won’t – affect US and global macro variables in the coming year, whether creaking public debt profiles will stir up the bond vigilantes, the limits of geopolitics as a driver of the macro story and more.
Analysis and events referenced in this episode:
Five for 25: The macro themes that will shape next year
https://www.capitaleconomics.com/blog/five-25-macro-themes-will-shape-next-year
Drop-In: The World in 2025 – The global macro and market outlook
https://www.capitaleconomics.com/events/drop-world-2025-global-macro-and-market-outlook
It was déjà vu all over again this week after a social media post from Donald Trump rattled markets. Group Chief Economist Neil Shearing is on the latest episode of The Weekly Briefing from Capital Economics to discuss how seriously we should treat the president-elect’s online threat to impose sweeping tariffs on Canada, Mexico and China. He also talks about whether moves in the bond market suggest that China is turning Japanese and warns of a distorted November US payrolls report.
Plus, a lot of time is spent analysing which economies are going to lose out when Trump returns to the White House, but what about the potential winners? Deputy Chief EM Economist Shilan Shah explains how Indian manufacturing could get a boost in an intensified global trade war.
Analysis and events referenced in this episode:
Event: The World in 2025
https://www.capitaleconomics.com/world-2025-event-december-2024
How to think about tariffs
https://www.capitaleconomics.com/publications/global-economics-focus/how-think-about-tariffs
Global Drop-In: US tariffs – How they’ll work, what they’ll do and how the world will respond
https://www.capitaleconomics.com/events/global-drop-us-tariffs-how-theyll-work-what-theyll-do-and-how-world-will-respond
Data: China Activity Proxy
https://www.capitaleconomics.com/data-and-charts/china-activity-proxy
Is a bubble in India’s stock market deflating?
https://www.capitaleconomics.com/publications/equities-focus/bubble-indias-stock-market-deflating
This special episode of The Weekly Briefing from Capital Economics is an exclusive extract from our online Drop-In briefing following Donald Trump’s threat to impose massive tariffs on Mexico, Canada and China.
Was this a negotiating ploy from the president-elect? Who’ll pay the cost of higher tariffs? How would targeted countries respond?
Group Chief Economist Neil Shearing, Vicky Redwood, our Senior Economic Adviser, and Chief Europe Economist Andrew Kenningham answered these questions and more in our day-after briefing.
Analysis and events referenced in this episode:
How to think about tariffs
https://www.capitaleconomics.com/publications/global-economics-focus/how-think-about-tariffs
Canada, China and Mexico in Trump’s firing line
https://www.capitaleconomics.com/publications/global-economics-update/canada-china-and-mexico-trumps-firing-line
Drop-In: US tariffs – How they’ll work, what they’ll do and how the world will respond
https://www.capitaleconomics.com/events/global-drop-us-tariffs-how-theyll-work-what-theyll-do-and-how-world-will-respond
