Trump announces 100% chip tariff as Apple ups U.S. investment
Investing.com - Peak tariff uncertainty has passed, potentially making it easier for companies to plan out investment decisions in the coming months, according to analysts at Barclays (LON:BARC).
However, in a note, the bank flagged that the focus is now shifting to the impact of the levies on broader economic growth, particularly in the United States.
Data in recent days out of the world’s largest economy have pointed a softening in the jobs market and stalling in the crucial services sector, which accounts for a bulk of activity. Meanwhile, input costs for services climbed to their highest level in nearly three years -- fueling concerns that the U.S. may be entering a period of elevated price gains and tepid growth dubbed "stagflation."
A separate report last week showed that U.S. economy grew by more than projected in the second quarter, rebounding from a contraction in the first three months of 2025. But the U.S. Bureau of Economic Analysis said the increase in gross domestic product was primarily a reflection of a decline in imports, which soared in the first quarter as companies raced to lock in orders prior to the announcement of President Donald Trump’s elevated "reciprocal" tariffs on a range of trading partners.
The GDP report also displayed moderate consumer spending growth, a sharp slowing in business investment and contraction in residential investment -- all potential red flags for the economy over the remainder of 2025.
"Arguably, a soft patch is widely expected," the Barclays analysts led by Emmanuel Cau wrote, flagging that GDP growth estimates for the third and fourth quarters were already cut sharply after Trump revealed his reciprocal tariffs in early April.
At the same time, a so-called "Fed put is in play," the analysts said, referring to a belief among investors that the Federal Reserve intervene -- possibly through interest rate reductions -- during financial market downturns. Following last week’s underwhelming U.S. jobs report, bets that the central bank will cut rates at its upcoming meeting in September have jumped. But the Barclays analysts said the Fed’s rate trajectory could change if inflation shows signs of accelerating, adding that next week’s consumer-price index release will be particularly crucial.
"Along with unpredictable Trump policy decisions, it raises pull-back risks, calling for downside protection," the Barclays analysts said.
U.S. stock markets have been choppy in recent days as traders gauge some disappointing economic indicators against a corporate earnings season that has been broadly solid.
Meanwhile, for Europe, absent the shock of a tariff-driven recession, the Barclays analysts "see a case for modestly higher highs" in the regional Stoxx 600 by the end of 2025. The index, which was last trading at 541.81, is tipped to finish the year at 570.