Welcome back to The Weekly Echo, and happy April Fools' Day! Don’t worry, everything in here is very real (we triple-checked). With the clocks springing forward in the UK, we're all hoping for brighter mornings and sunnier days, even if the global economic outlook remains a little cloudier.

This week, we’re unpacking how Trump’s tariff strategy may be backfiring, with key Asian economies banding together and Canadian consumers voting with their wallets. We’re also looking at the economic fallout from a devastating earthquake in Asia, alongside the latest shifts in global trade and monetary policy. Let’s dive in.

Trump’s Tariffs Backfire: Global Pushback and Consumer Boycotts Gain Momentum

​President Donald Trump's tariff policies are facing mounting challenges as international partners unite against U.S. trade measures, and consumer backlash grows in neighboring countries.​

China, Japan, and South Korea Form Unified Front

In a significant development, China, Japan, and South Korea have agreed to collaboratively address the U.S. tariffs imposed by the Trump administration. During their first economic dialogue in five years, held on March 30, 2025, the three nations committed to enhancing regional trade relations and countering trade disruptions caused by these tariffs. Japan and South Korea plan to import semiconductor raw materials from China, while China aims to purchase semiconductor products from Japan and South Korea. The ministers also agreed to improve supply chain collaboration and advance talks on a trilateral free trade agreement to bolster regional and global trade.

Canadian Consumers Boycott American Goods

In Canada, a surge of nationalist sentiment has led consumers to favor domestic products (home-produced) over American imports. The "Buy Canadian" movement has gained momentum, with many Canadians actively seeking homegrown alternatives in supermarkets and other retail outlets. This shift is a direct response to U.S. tariffs on Canadian steel and aluminum, which have intensified patriotic purchasing behaviors. Retailers have reported a significant increase in demand for Canadian-made products, while U.S. companies are experiencing reduced orders and shelf space in Canadian stores.

Broader Implications and Global Response

The coordinated efforts of China, Japan, and South Korea, coupled with consumer-driven boycotts in Canada, underscore the growing international resistance to U.S. trade policies. These actions highlight the potential for broader global alliances to form in opposition to protectionist measures, potentially leading to shifts in international trade dynamics and supply chains.​

As these developments unfold, the effectiveness and consequences of the Trump administration's tariff strategies remain under scrutiny, with indications that such policies may be yielding unintended economic and diplomatic repercussions.

Myanmar Earthquake: Devastation and Economic Impact

A devastating 7.7-magnitude earthquake struck central Myanmar on March 28, 2025, causing widespread destruction and significant loss of life. The disaster has profound economic implications for Myanmar and neighboring countries, highlighting the extensive financial toll that natural disasters can inflict on developing economies.​

Immediate Economic Impact

The earthquake resulted in approximately 1,700 deaths, with thousands more injured and missing. Major cities like Mandalay and Sagaing experienced severe infrastructure damage, including the collapse of buildings, bridges, highways, and railways. This destruction has disrupted commerce, transportation, and daily life, leading to immediate economic losses. The U.S. Geological Survey estimates that the death toll could rise to over 10,000, with economic losses potentially exceeding the country's annual economic output. 

Infrastructure and Supply Chain Disruptions

The damage to critical infrastructure has hindered rescue and relief efforts and poses long-term challenges for economic recovery. The destruction of roads and railways disrupts supply chains, affecting the movement of goods and services. This is particularly detrimental to Myanmar's agricultural sector, a significant contributor to the nation's GDP, as farmers face difficulties in transporting produce to markets. Additionally, the energy sector is impacted, with power outages affecting thousands of homes and businesses, further stalling economic activities.

Impact on Neighboring Countries

The earthquake's tremors were felt in neighboring countries, including Thailand, where at least 18 people died, and a 30-story office tower under construction in Bangkok collapsed. This incident has prompted Thai authorities to review and potentially tighten construction safety regulations, which could lead to increased costs in the building sector and affect the broader economy. ​

Long-Term Economic Consequences

Historically, natural disasters in the region have led to prolonged economic downturns. For instance, the 2013 Lushan earthquake in China resulted in significant long-term financial strains on affected businesses, including decreased cash flow liquidity and profitability. Similarly, the recent earthquake in Myanmar is expected to have enduring economic repercussions, particularly if rebuilding efforts are delayed or mismanaged.

Gold Prices Surge as Investors Flee to Safety

Recent gold price increases have reached new record highs as investors seek refuge from global uncertainty. As of the final week of March, gold hit $2,290 per ounce, climbing nearly 15% since the start of the year. But what’s driving this dramatic rise - and what does it mean for the global economy?

Why Are Gold Prices Rising?

Gold is often called a “safe haven” asset. That means in times of economic uncertainty or market turbulence, investors shift their money into gold because it tends to retain value. Unlike currencies or stocks, gold doesn’t rely on company profits or government policy - it’s considered a timeless store of value.

There are a few key reasons contributing to gold’s increased demand:

• Global Uncertainty: From Trump’s tariffs sparking trade wars to political instability in Europe and Asia, uncertainty is high. Gold performs well when confidence in governments and markets falls.
  

• Weaker Dollar: Gold is priced in U.S. dollars, so when the dollar weakens, gold becomes cheaper for foreign buyers, pushing up demand and price.
  

• Rate Cut Expectations: Investors believe central banks like the U.S. Federal Reserve may start cutting interest rates soon. Lower interest rates reduce the opportunity cost of holding gold (which pays no interest), making it more attractive to own.
  

What Does This Mean?

The surge in gold is both a symptom and a signal. It shows rising anxiety in financial markets and a lack of faith in traditional investments. If this trend continues, it could be a warning sign of a deeper slowdown or correction on the horizon.

Worst Start to a Year for U.S. Markets Since the Pandemic

The numbers are in, and the U.S. stock market is officially off to its worst first-quarter performance since the 2020 COVID pandemic. Major indices like the S&P 500 and NASDAQ have fallen more than 10% since the start of 2025, putting them firmly in correction territory.

What’s Driving the Selloff?

There’s no single cause, rather, a perfect storm:

• Trump's Tariff War: The reintroduction of aggressive tariffs on imports from China, Mexico, Canada, and potentially Europe has rattled supply chains and increased costs for U.S. businesses. Investors' confidence has been hit as fears that increased input costs for businesses will harm output spread.
  

• Slowing Economic Growth: The U.S. economy is showing signs of losing steam. According to the latest forecasts by the Federal Reserve Bank of Atlanta, GDP is expected to show a 1.5-2.8% contraction for Q1 2025, signalling that consumer spending is flatlining, business investment is falling, and job growth has slowed.
  

• Debt Ceiling Drama: Ongoing political wrangling over the U.S. debt ceiling is weighing on investor confidence, with fears of a government shutdown or even default looming.
  

• High Interest Rates: The Federal Reserve’s interest rates remain high, keeping borrowing costs elevated. This makes everything from credit cards to business loans more expensive, slowing down the economy further.
  

Why Does It Matter?

When stocks fall for an extended period, retirement funds shrink, businesses lose access to cheap capital, and investor confidence takes a hit. This can lead to companies delaying expansion plans, cutting jobs, or even struggling to raise money. Consumers, seeing their investments or pensions decline, may cut back on spending, weakening demand across the economy. If these trends persist, the fear of a downturn can turn into reality, creating a cycle where falling markets and slowing economic activity reinforce each other.

Conclusion

From crumbling trade relations and geopolitical shake-ups to surging gold prices and a worrying start to the year for U.S. markets, it’s clear that global economic sentiment remains fragile. While investors hunt for safety and governments scramble to stabilise markets, the big question is whether we’re headed toward a broader correction or simply navigating a particularly turbulent moment.

In the coming weeks, keep an eye on how trade tensions evolve, how markets digest further interest rate news, and whether safe haven assets like gold continue to climb. As always, we’ll be here to make sense of it all, without the jargon.

Thanks for reading, and we’ll see you next week.

Best wishes,

Harry & Reika
Co-Founders, Echonomics

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