Subpar US, stagnant Europe and surging China as Trump policies beckon

Editor's note: Ankit Prasad is an editor and business commentator for CGTN. The article reflects the author's views and not necessarily those of CGTN.

US GDP growth slowed marginally and fell below analysts' expectations to 2.3 percent in the fourth quarter and 2.8 percent in 2024, as reported by the Associated Press, days before the new Trump administration's much-touted tariff policies take effect, starting with a 25 percent tax on imports from closest neighbors and biggest trading partners Canada and Mexico. 

That Trump was undecided until the eve of tariff rollouts on whether oil imports would be included in their ambit indicates there is room to maneuver, or at least kowtow. 

As witnessed in the short but pointed standoff over returning illegal immigrants to Colombia, Trump has shown in the fledgling days of his presidency that tariffs are likely to be used as much in the form of quickfire threats as structured trade tools. 

Where this leaves both US-based and foreign manufacturers and their longer-gestation plans is anyone's guess.

In terms of American companies, however, there have been some standouts this earnings season, despite the biggest headline continuing to be the DeepSeek impact. 

While Nvidia, Alphabet and Amazon are yet to announce results, the remaining "Magnificent 7" have, with Meta perhaps being the most noteworthy. 

The Mark Zuckerberg-led company reported a 49 percent rise in fourth quarter profits to $20.8 billion while revenue was up 21 percent to $48.4 billion. Microsoft saw fourth quarterly revenue rise 12 percent to $69.6 billion and net income by 10 percent to $24.1 billion. Apple's 7 percent increase in quarterly profits to $36.3 billion and 4 percent higher revenues of $124.3 billion was tempered by a 1 percent fall in revenue from iPhones. Elon Musk-led Tesla's fourth quarter profits witnessed a dip attributed to one-time items to $2.6 billion, while revenue, up 2 percent, fell short of analysts' expectations at $25.7 billion.

As US companies face increasing foreign competition and the economy braces for the impact of prospective Trump policies and funding cuts, on the other side of the Atlantic there are likely many people looking at that hubbub of activity with a tinge of envy. 

While the US Federal Reserve kept key interest rates unchanged after three back-to-back cuts last year, the European Central Bank slashed its rates by 25 basis points to 2.75 percent in a fourth successive bid to jolt the euro area economy, which recorded 0.7 percent growth for the year and zero quarterly growth in the final quarter, as per Eurostat data. The world's third largest economy Germany, which is bracing for elections, has seen its economy shrinking two years in a row and has slashed its outlook for 2025 to 0.3 percent. France at least managed to keep its head above water for the year, with GDP rising 1.1 percent despite a 0.1 percent fall in the fourth quarter amid its own political uncertainty.

While Europe grapples with issues notably highlighted in Trump's freewheeling remarks at Davos 2025 as well as in the high-profile Draghi report, the Eastern hemisphere has continued to maintain a different standard of figures. 

Buoyed by timely stimulus measures, the fourth quarter growth of the world's second largest economy China exceeded analysts' expectations at 5.4 percent, hitting the 5 percent GDP growth target for the year as per the National Bureau of Statistics. 

Adding to it are two trillion-dollar headline figures, with major industries again recording over $1 trillion combined profits in 2024 after a stellar December rebound, and China's yearly trade surplus also being reported at a historic $990 billion. 

Not far away, just before its annual budget, India's economic survey has projected 6.3 percent to 6.8 percent growth for the coming fiscal after sliding to 5.4 percent in the quarter ended September.

As February begins, the world economy remains moored in choppy waters, some more than others, with the threat of looming gales from the White House. And policymakers and business leaders will undoubtedly be looking at every tool to help navigate. What they eventually do may be informed in large part from what next happens with Canada and Mexico. And so it begins.

(Cover via CFP)