President Trump’s plan to raise tariffs on US imports of steel and aluminium does not pose an immediate threat to the world economy. Together they account for only a small share of world trade, and we suspect that any retaliation from key trade partners would be fairly measured, in order to contain the risk of escalation. In any case, world trade looks set to stay pretty strong in the near future. Meanwhile, the latest business surveys suggest that another period of political uncertainty in Italy will not dent its economic recovery. The big picture is that the steady expansion of the global economy, which gained momentum last year, has continued. There are also tentative signs of a pick-up in inflationary pressures which will embolden central banks to press on with plans to withdraw policy stimulus.
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