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Investing.com - U.S. President Donald Trump’s tariffs are tipped to be a key focus again this week after his pronouncements on trade contributed to widespread uncertainty among investors. Elsewhere, crucial U.S. economic data is due out, including new figures on consumer price inflation, while House Republicans are expected to vote on a spending bill that would avoid a federal government shutdown.
1. Tariffs in focus
President Donald Trump’s trade policies will likely be under the microscope this week, particularly after confusion caused by near-daily developments in his tariff plans sparked recent ructions in stock markets.
The benchmark S&P 500 slumped to its worst week in half a year despite notching a gain on Friday, while the tech-heavy Nasdaq Composite has slid down by more than 10% since touching a record high in December -- putting it squarely in correction territory.
Late last week, Trump unveiled a temporary delay on 25% levies on most goods incoming from traditional U.S. trading partners Canada and Mexico until April 2. The postponement covers products that were included in a prior trade deal signed during Trump’s first term in office.
Although markets breathed some sigh of relief at the decision, investors have still flagged major worries over the confusion swirling around Trump’s near-constant stream of threats, announcements and reversals. The tariffs are also clouding the outlook for inflation and growth, raising fresh fears over a potential slowdown in the U.S. economy.
"The on-and-off nature of Canadian/Mexican tariffs shows that predicting trade policy is fast becoming a fool’s game," analysts at ING said in a note to clients.
2. U.S. economic data
Highlighting a string of economic data points this week will be the release of the all-important consumer price index for February, which is due to provide an updated glimpse into the path of U.S. inflation.
Wednesday’s report will encompass the first full month of Trump’s administration since he returned to the White House in late January. Prices grew at the fastest path since August 2023 in the opening month of 2025.
Economists anticipate that the headline figure cooled to 2.9% from 3.0% in the twelve months to February. Month-on-month, it is seen easing marginally to 0.3% from 0.5%.
The number will be among the last the Federal Reserve receives before its next policy gathering on March 18-19. The central bank pushed pause on an easing cycle at its last meeting in January and indicated that it will take a wait-and-see approach to further rate cuts, partly citing uncertainty around the inflationary impact of Trump’s tariff policies.
But signs of slowing inflation and faltering economic activity could bolster the case for reductions this year. Fed funds futures suggest that the Fed will roll out 70 more basis points of cuts through December, according to LSEG data cited by Reuters.
Markets will also be keeping tabs on a forward-looking University of Michigan survey, especially after it showed a decline in consumer sentiment and an uptick in inflation expectations last month. A reading of job openings that is commonly used as a proxy for labor demand is also scheduled to be published.
3. House to vote on bill to avert government shutdown
Republicans in the U.S. House of Representatives are moving forward with a funding proposal backed by Trump that would keep the federal government open through September 30.
The bill includes $13 billion in reductions in nondefense discretionary spending, while also lifting defense expenditures by roughly $6 billion and increasing the amount of money allocated for border security.
Despite likely opposition from Democrats angered by Trump’s recent moves to slash government programs and lay off federal workers, House Republican leaders have reportedly expressed confidence that they can ensure their party’s unanimous support of the measure, which will be needed to pass it through the lower chamber of the U.S. Congress.
Should it be approved in an expected vote on Tuesday, the bill will head to the Senate, where some Democratic backing will be required to surpass the key 60 vote threshold to overcome a filibuster.
"A shutdown is certainly possible, but the politics of one aren’t advantageous to either party," analysts at Vital Knowledge said in a note. "Republicans don’t want to compound Trump’s economic pressures (which will likely prompt them to back a [continuing resolution]) and Democrats are happy to see the GOP ’own’ the present financial turmoil."
4. Bank of Canada rate decision
The Bank of Canada’s interest rate decision will be in focus following U.S. tariff actions against its northern neighbor.
Officials are widely tipped to slash borrowing costs by a quarter of a percentage point to 2.75% from 3.00%, but the spotlight will likely shine on any forward guidance the central bank gives around the effect of Trump’s trade policies.
Analysts have flagged that the U.S. levies, which include a 10% surcharge on energy imports, could threaten the stability of a tightly-integrated North American economy. Goods needed to manufacture cars, for example, often cross the Canadian and Mexican borders multiple times before ending up in American showrooms.
Media reports have said that Canadian retaliatory tariffs against the U.S. would remain in place despite Trump postponing the duties on most goods from the country for a month.
5. Earnings ahead
A raft of quarterly earnings from tech industry players are expected to be unveiled this week, including returns from Oracle (NYSE:ORCL).
The results will come after Trump said the company, in conjunction with ChatGPT-maker OpenAI and Japan’s SoftBank (TYO:9984), would make a sizeable investment into artificial intelligence infrastructure. Trump said the joint venture, known as Stargate, would plug $500 billion into a U.S. drive to outpace global rivals in the race to build out its domestic AI industry.
The Texas-based group has been boosted lately by the growing prominence of its cloud service. However, the Vital Knowledge analysts noted that investors have begun to worry over the broader tech sector, "with even inline reports triggering steep declines."
Other tech sector earnings will come from Adobe (NASDAQ:ADBE) and DocuSign (NASDAQ:DOCU), while retailers Dick’s Sporting Goods (NYSE:DKS) and Kohl’s (NYSE:KSS) could also offer some insight into the state of the U.S. consumer.