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This year’s discussions were framed by a sense of deep uncertainty, driven by the resurgence of protectionist policies, fiscal challenges, and heightened geopolitical tensions. The return of the Trump administration and its revived focus on tariffs, loomed heavily over debates, with concerns about fragmentation, inflation pressures, and a potential retreat from globalisation.

A major theme was the risk that renewed tariff policies could destabilise global growth. Several participants warned that escalating trade barriers, including proposals for steep tariffs on Chinese imports, could disrupt supply chains, dampen business investment, and stoke inflation.

While some advisors argued that a tariff-driven strategy might boost domestic industries and reindustrialise the US economy, many were sceptical. Most economists at the forum believed that tariffs would hurt consumers, complicate monetary policy, and introduce persistent uncertainty into global markets. There was broad concern that prolonged tariff escalation could cause lasting damage. Some asset managers indicated they were cautiously reducing US exposure, anticipating that prolonged uncertainty could weigh on US equities and the broader investment environment. Currency dynamics were also impacted. Typically, the US dollar strengthens during periods of risk aversion. However, recent behaviour has been more volatile, weakening on bad news and strengthening on good news, highlighting how tariffs and protectionism are now overriding traditional market patterns. From a China perspective, Tao Wang, Chief China Economist here at �۶���Ƶ, explained that China’s economy, with its existing output gap and muted post-pandemic recovery, may be more resilient to tariffs than many expect. Wang expects a fiscal-led policy response from China, helping to soften the impact of external shocks while accelerating its push for greater regional integration and strategic autonomy.

The forum also focused on the challenge of fiscal sustainability. Many speakers stressed that after years of pandemic-related spending, governments now need to refocus on fiscal responsibility to maintain stability and policy credibility.

In the United States, the tension between expansive industrial policy ambitions and limited fiscal space was clear. A former policy advisor pointed out that the administration seems surprisingly willing to absorb near-term economic “pain” to pursue long-term manufacturing and national security goals. However, some participants questioned whether such a path is sustainable without triggering concerns around debt sustainability or crowding out private sector activity.

The broader consensus was that tighter fiscal management will be critical for maintaining economic resilience in an era of slower growth and higher geopolitical risks. Governments were urged to pursue targeted investment while keeping a firm handle on deficits and public debt trajectories.

The role of central banks was another major focus, particularly regarding how they should respond to trade-driven inflation shocks.

A senior economist at the forum noted that the pandemic-era inflation surge had revealed the dangers of central banks being too slow to react to new risks. Many participants stressed that policymakers must remain agile, ready to pivot policy settings quickly if tariffs or trade disruptions ignite new price pressures or dampen growth.

While few expect central banks to immediately tighten in response to tariff announcements alone, there was agreement that credibility risks are growing. In the US, the Federal Reserve faces the challenge of managing inflation expectations after five consecutive years of overshooting its 2% target. One economist observed that monetary policy flexibility is vital: tightening too aggressively could choke off growth, but moving too slowly could undermine market confidence and entrench inflation expectations. Preparedness to act decisively was seen as a central pillar of effective policy.

There was also discussion around the unusual short-term effects of tariff shocks on consumer behaviour. Some panellists noted that American households are likely to front-load purchases ahead of expected tariff hikes, providing a temporary boost to consumption that could later reverse sharply, adding to market volatility.

Another dominant theme was the growing linkage between economic policy and national security.

Many speakers stressed that ensuring resilience, particularly in critical sectors such as energy, technology, and healthcare, is now seen as a strategic imperative for governments worldwide. The vulnerabilities exposed during the pandemic and ongoing geopolitical tensions have reinforced the need for “friend-shoring” and diversification of supply chains.

A senior European central banker argued that regions like Europe must invest more heavily in defense, energy independence, and strategic industries if they are to maintain their economic sovereignty. There was particular interest in proposals for pooled European defense investment vehicles that could boost resilience and create new safe-haven assets.

However, participants also warned that building true strategic autonomy will take time and political will. In Europe, despite rhetoric around greater independence, progress has been slow, and many governments face domestic constraints that could limit their ability to act decisively. For investors, the implications are clear: economic security considerations are set to play a far larger role in shaping growth patterns, investment flows, and regulatory environments in the years ahead.

Deregulation was also discussed as a key policy tool for stimulating economic growth, particularly in countries facing fiscal constraints.

Participants noted that reducing regulatory burdens can help unlock private sector investment, boost entrepreneurship, and improve productivity, without requiring large public expenditures. A former government advisor highlighted how a more business-friendly regulatory environment could help offset some of the economic drag from tariffs or trade fragmentation.

In the US, deregulation is expected to be a major focus of economic policy in the coming years, complementing tax incentives and industrial policy measures. The hope is that by streamlining rules and compliance requirements, policymakers can encourage a new wave of domestic investment, innovation, and job creation. Across Europe and Asia as well, there was recognition that smart regulatory reform could help economies adapt more flexibly to a more volatile and contested global environment.