Inside the Trump Effect: How Six Months of Policy Shifts Are Hitting Global Assets

Summary: EBC tracks how Trump's tariffs, crypto push, and fiscal moves in his first 6 months are reshaping global assets and investor sentiment.

From crypto coins to tariff battles, President Donald Trump's return to the White House has set off a wave of economic disruption. At EBC​ Financial Group, we've closely followed how his second term has rattled assumptions, tested investor confidence, and reshaped the behaviour of key asset classes. Six months in, it's increasingly clear that markets are now reacting less to fundamentals and more to fast-moving political shifts.

Let's examine how Trump's early-term policy pivot is already reshaping the global financial landscape.

A New Tariff Playbook

One of the earliest and most significant moves from the Trump administration came in the form of revived protectionism. In April, the president announced the "Liberation Day" tariff package - an aggressive policy shift that markets had anticipated but still struggled to digest.

Initial relief came when the measures were delayed, fuelling a short rally across global equities. However, the White House later confirmed full implementation, prompting a renewed sell-off. The new framework includes a baseline 10 percent duty on most countries and a series of targeted levies: 25 to 40 percent on goods from South Africa, Malaysia, and Thailand, a 50 percent duty on copper, and a 40 percent surcharge on transhipped goods from Vietnam.

Trade deals have been finalised with the UK and Vietnam, while negotiations with China, Canada, and the EU remain in progress. With the 90-day pause now expired, the tariff plan takes full effect from 1 August.

"Markets are responding to a single decision-maker controlling tariff policy," noted David Barrett, CEO of EBC Financial Group (UK) Ltd. "That makes the environment more uncertain than usual, as the economic impact depends not only on policy details but on the next political impulse. We are not just seeing supply chain adjustments; we are witnessing a reshaping of global trade flows."

Economic Indicators Give Mixed Signals

While policy headlines have dominated, the underlying data has painted a more complex picture. Inflation, which had surged to 3 percent in January, has now eased to 2.4 percent - suggesting some cooling in consumer pricing pressures. Yet the headline GDP figure told a more sobering story, with a 0.5 percent annualised contraction in the first quarter. That marked the first quarterly decline in three years.

Economists have pointed to temporary factors, such as pre-tariff import surges and inventory build-up, but deeper concerns are surfacing. Consumer spending remains subdued, housing activity has slowed, and forward-looking sentiment indicators continue to weaken.

In the jobs market, May was notable for a sharp reduction in federal employment - 22,000 roles were eliminated as part of the president's so-called "efficiency drive." However, June's non-farm payrolls (NFP) exceeded expectations, adding 147,000 jobs against a forecast of 110,000. The unemployment rate dipped slightly from 4.2 to 4.1 percent.

"On the surface, economic indicators seem manageable, but they are not telling the full story," said Barrett. "Retail sales have softened, construction activity is lagging, and consumer sentiment is visibly deteriorating. The question now is whether this is the start of a cyclical slowdown or something more structural."

Fiscal Expansion Meets Debt Anxiety

Trump's legislative centrepiece so far has been the 900-page ‘Big Beautiful Bill', passed in late June. The wide-ranging law permanently extends the 2017 tax cuts, introduces targeted tax incentives, reduces Medicaid funding, and increases spending on defence and border security. Crucially, it also raises the US debt ceiling by $5 trillion, giving the Treasury more headroom to borrow and avert a government shutdown.

Financial markets initially welcomed the clarity on tax policy and the removal of short-term fiscal risk. However, the simultaneous increase in spending and borrowing has reignited concerns about long-term fiscal sustainability.

"The US has bought itself time, but at the cost of greater fiscal pressure," Barrett explained. "For markets, all eyes are watching if these policies can drive real productivity and growth or whether they merely delay the reckoning."

The Fed Walks a Fragile Line

Trump's vocal push for interest rate cuts has placed the Federal Reserve in a difficult position. Chair Jerome Powell has so far resisted the pressure, citing inflation risk and a need for policy independence.

Since March, the US dollar has steadily weakened, dragged lower by concerns over rising debt and the broader economic impact of tariffs. Meanwhile, 10-year Treasury yields, which had spiked to nearly 4.8 percent earlier this year, have stabilised between 4.0 and 4.6 percent, now hovering near 4.4 percent.

"Inflation has eased for now, but the full effects of tariffs have yet to be priced in," Barrett warned. "If costs rise further and corporate margins shrink, we could see a scenario where the Fed faces both political pressures to cut and economic pressure to hold steady. That's a difficult line to walk."

Crypto Finds a Political Ally - With Risks

Perhaps the most surprising policy shift so far has been Trump's open embrace of cryptocurrency. In March, the administration unveiled a strategic bitcoin reserve. Just weeks later, it launched the official Trump memecoin - known as $TRUMP.

While the move ignited a flurry of market activity, it also stirred controversy. The Securities and Exchange Commission (SEC) responded by launching a dedicated crypto task force to create a new registration and oversight framework. Trump's pro-crypto stance and the inclusion of Web3 advocates in policy roles have fuelled speculation that regulation may ease in the coming year.

Still, questions remain.

"There's a risk that crypto's credibility is undermined by political branding," Barrett said. "For the industry to mature, it urgently needs regulatory clarity."

Broader Implications for Global and UK Markets

The market effects of Trump's policy playbook extend well beyond the US. In the UK, exporters are watching closely. As US–China trade slows, British companies may find new opportunities in sectors where American or Chinese goods are becoming less competitive. However, rising energy costs and increased trade complexity pose significant challenges.

"Protectionism always comes with winners and losers," said Barrett. "The challenge is to assess exposure, act decisively, and stay ahead of shifting global demand."

Looking Ahead: Volatility Is the New Constant

The Federal Reserve now projects GDP growth of just 1.4 percent for 2025, down from 2.4 percent in 2024. Inflation and employment may remain relatively stable in the short term, but market participants are entering an era where one policy announcement can send global assets into motion.

At EBC, we believe that the next six months will demand heightened vigilance and adaptability from investors across all asset classes.

"This is not a moment for complacency," Barrett concluded. "Investors must remain vigilant. We are entering an era of policy-driven markets, where one executive order can reshape the global playing field overnight."