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Macroeconomic Insights: 90 More Days of Letting the Data Speak

Within hours of the large-scale tariffs taking effect, the Trump administration announced a 90-day pause, replacing the full tariff package with a baseline 10% rate. China—among the first countries to respond with retaliatory tariffs—was excluded from this pause and...

Macroeconomic Insights: 90 More Days of Letting the Data Speak

Within hours of the large-scale tariffs taking effect, the Trump administration announced a 90-day pause, replacing the full tariff package with a baseline 10% rate. China—among the first countries to respond with retaliatory tariffs—was excluded from this pause and instead faced a significantly higher 125% tariff. The announcement triggered the largest rally in stock market since 2008, largely reversing the losses incurred following the initial tariff news earlier that week.

During this period, Turnleaf chose not to apply discretionary adjustments to any of its inflation models to account for tariffs. Our stance remains firmly anchored in a data-driven methodology. Given the inherently inflationary nature of economic uncertainty, our inflation curve has consistently run above consensus expectations. We continue to place greater confidence in our models than in speculative overrides. For us, the data leads.

For economies like China, Turnleaf projects continued price contraction as the U.S. trade war undermines consumer confidence and erodes external demand—particularly from the Eurozone. Disinflationary pressures are expected to persist as trade tensions escalate and global partners increasingly decouple from Chinese supply chains. Given China’s centrality to global value chains, the probability of a broader global slowdown remains non-zero. Close monitoring of forward-looking manufacturing indicators will be essential to assess the dynamics of this disinflationary impulse.

Looking ahead, we expect the recent disinflationary effect from Brent crude oil prices to fade as markets stabilize. However, until the U.S.–China trade dispute is resolved and countries subjected to the 10% baseline tariff conclude their renegotiations, the elevated uncertainty and erosion of trust among economic partners will likely sustain long-term inflationary pressures.

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