Protectionism casts a shadow over the new year

The start of a new year is a traditional time to take stock of the previous 12 months and look ahead to the next. In this regard, CRU’s most recent annual client survey, conducted at the end of December last year, makes interesting reading as to your own concerns for 2025 and beyond. There were numerous responses across commodity and financial sectors, and broadly based worldwide, if slightly skewed towards Europe and North America, but across all of these the key worry for the coming year clearly emerged as trade tariffs and protectionism. This is perhaps unsurprising, given incoming US president Donald Trump’s avowed intent to impose blanket 20% tariffs on all goods entering the US, and up to 60% on China. While most clients did not think tariffs would rise as much as some of Trump’s rhetoric might suggest, most expect rises of 5-10% across the board, and Asian businesses are most concerned. CRU’s most recent position paper on US tariffs highlights some of the internal political and legal challenges in implementing these, but does acknowledge that some rises will be inevitable, and may well produce the kind of reciprocal measures last seen in the previous Trump administration’s trade war with China and the EU in 2018.

Of course protectionism comes in many forms, and many respondents were also concerned about trade and trade restrictions based on sustainability criteria, such as the EU Carbon Border Adjustment Mechanism or US Inflation Reduction Act. A number of other issues – including carbon pricing, reporting requirements and supply chain issues – were of roughly equal importance. Additionally, and perhaps unsurprisingly in a world where war in Ukraine has led to its own sanctions regime against Russia and Houthi rebels take potshots at passing shipping in the Red Sea, war and geopolitics were also cited as major downside risks to growth.

“Most clients were cautiously optimistic that 2025 will see continued steady growth…”

Even so, most clients were cautiously optimistic that 2025 will see continued steady growth, falling interest rates and further progress towards decarbonisation. A clear majority expected global growth to be between 2-3% in 2025. This is in line with CRU’s own forecast of 2.6%, and similar to growth in 2024 (which is expected to have been 2.7%). A figure of 3% is widely acknowledged as being the trend rate of growth that can be expected from the world in ‘normal’ times. Most respondents also agreed with CRU’s view that interest rates will fall this year in most major economies, with respondents in North America being the most dovish.