Webinar Review: A Global Trade and Economy in Flux

Estimated reading time: 3 minutes

In a July 8 webinar, Global Electronics Association Chief Economist Shawn DuBravac provided a comprehensive analysis of the evolving international trade environment, its implications for inflation, monetary policy, and labor dynamics, and a sober assessment of market valuations.

In “Navigating a Shifting Landscape,” hosted by the Global Electronics Association, DuBravac painted a picture of a global economy in flux, where shifting trade alliances and tariff structures are redrawing the supply chain map and influencing the broader economic landscape, while also conveying an overall bullish market outlook.

He broke down the three major trade agreements the United States has entered into in recent months. The first, a framework with the UK announced in May, reduces U.S. tariffs on British car imports from 27.5% to 10% for up to 100,000 vehicles annually. It also eliminates tariffs on various aerospace components and grants duty-free quotas for U.S. beef and ethanol. While the agreement stopped short of lifting tariffs on UK steel and aluminum—still set at 25%—there is ongoing pressure from the UK to reduce them further.

In June, the U.S. and China reached a second framework following meetings in Europe. This deal significantly reduces tariffs on Chinese imports from a peak of 145% to a cumulative 55%. China, in turn, lowered tariffs on U.S. goods to 10% and pledges to ease rare earth export restrictions, a strategic win for U.S. electronics, defense, and renewable sectors. The deal also restores educational exchanges, allowing Chinese students to continue studying at American universities.

A third agreement, finalized in early July with Vietnam, DuBravac described as largely one-side. The U.S. set a 20% tariff on Vietnamese goods—down from a proposed 46%—and imposed an additional 40% tariff on transshipped goods. Despite the steep tariffs, Vietnam has agreed to eliminate tariffs on U.S. imports, effectively opening its market to American goods. This change could lead to major shifts in electronics supply chains, particularly as Vietnam has seen rising exports of laptops and smartphones in recent months, often at China’s expense.

DuBravac then turned his attention to macroeconomic factors, noting the dollar has weakened 7.5% year-to-date, contributing to higher import prices, regardless of tariffs. Meanwhile, a strong June jobs report led markets to reduce expectations of Federal Reserve rate cuts in 2025, from three to two. DuBravac emphasized his ongoing belief that rates will remain “higher for longer,” adding pressure to import costs and inflation.

Inflation, while trending down in early 2025, is expected to rise again in the second half of the year due to cumulative tariff increases. Consumer inflation expectations remain above the Federal Reserve’s 2% target, hovering around 3.2%, with material costs rising steadily since the start of the year. In contrast, labor cost pressures are beginning to ease, although still elevated compared to pre-pandemic norms.

Manufacturing employment continues to decline, with the sector shedding 10,000 jobs in the first half of 2025. The labor market, however, remains tight but stable. Hiring has slowed, and quit rates have dropped, indicating fewer workers are confident about switching jobs for higher pay. The job openings-to-unemployed ratio in manufacturing has fallen below 1.0, pointing to a softer labor market, although manufacturers remain cautious about layoffs due to past difficulties in rehiring post-pandemic.

Finally, DuBravac warned of high equity market valuations, noting that stocks are trading around 50% above their post-2011 averages. If a recession were to occur, a market correction of up to 33% could follow—though he anticipates any such downturn would be brief, similar to recent post-pandemic rebounds.

In closing, he emphasized that while inflation and labor dynamics remain in flux, the structural trade shifts underway—particularly in manufacturing and technology—could have long-term consequences for how companies source and produce goods. The second half of 2025, he noted, will be critical for observing how markets, supply chains, and central banks respond to this rapidly evolving economy.