One of the posts from the incumbent US President on social media from seven years ago read as follows: ‘Trade wars are good and easy to win’. Whether they are good depends on one’s taste but the first 100 days of his second Presidency showed that whilst erecting trade barriers is a simple exercise, winning trade wars, ie. narrowing trade deficit and bringing manufacturing home, is an arduous if not impossible task. The achievements and failures of Mr Trump’s apparatus, from our perspectives, are measured on three inter-connected tenets: domestic and foreign policy, domestic and global economy and the inevitable impact of these two on the global oil balance. One might add the most salient gauge for anyone bearing a public office: approval rating, which is the second lowest for any US President since WWII with the lowest one being himself in 2017, according to polling firm, Gallup.

Domestic and foreign policies: the ongoing attempt to radically change the social fabric in the US is perceptible. There is undeniable success in one of the major campaign promises: to crack down on illegal immigration. Although deporting migrants has not lived up to expectations, illegal crossings from Mexico have plummeted impressively. In March 2025 only 7,000 arrests have been made at the border compared to 137,000 arrests a year ago, under the previous Administration.

The battle against ‘woke’ culture is in full swing, most aptly mirrored in the withdrawal of funding from US universities. No doubt, the attack, which so far has frozen or cancelled around $6 billion in research grants and contracts, put world-class research in jeopardy. Add to that the complete disregard and defiance of US court orders and one cannot help but think that US competitiveness in innovation and as an investment destination will suffer as anxiety about its credibility grows.

Foreign policy developments have been troubling. If winning trade wars is difficult, winning military wars is equally cumbersome. The pledge of ending the Ukrainian war in 24 hours was always bordering with the ridiculous but more worryingly, President Trump believes in the God-ordained right of the strong to dictate. This is why a great opportunity of forcing Russia to the negotiating table has been missed and this is why there is an increasingly plausible chance of Ukraine losing its sovereignty, notwithstanding last night’s coercive ‘economic partnership’ agreement, which gives Washington access to Ukraine’s natural resources. For the same reason overthrowing the Iranian regime cannot be ruled out either and alas the annexation of Canada or the occupation of Greenland are no laughing matters either.

Domestic and global economy: proponents of international trade and globalization like to compare the global economy to a pie, which keeps growing and whilst one’s proportionate share might decline her absolute wealth increases. That pie is inedible, Donald Trump reckons, and the economy and trade are zero-sum games. Hence the crusade against trade deficit, for which the most effective medicine is tariffs. The approach simplifies the underlying causes of imports exceeding exports and causally sweeps under the carpet the sanguine impact the service sector has on economic growth. Trade policies re- or mis-interpret the role of government, which is not a profit-oriented organization.

Announced and implemented import tariffs rest on the fallacy that they will bring manufacturing back to the US and at the same time pay for the tax cuts, another one of the Trump campaign promises. This in itself is an oxymoron, as repatriating manufacturing entails falling imports and consequently declining import tariffs. Secondly, manual labour supply in the US will not be able to satisfy the potential demand of a growing manufacturing sector, another reason why the plan seems a fool’s errand.

Despite the upbeat official narrative and emphasizing the best 100-day under any President, researchers have blatantly and recalcitrantly stressed the adverse impacts of trade wars. The IMF, for one, adjusted both US and global growth forecasts downwards. The Bureau of Economic Analysis reported a 1Q contraction of 0.3% yesterday, although it is the result of stockpiling in response to tariff announcements. Imports surged, trade deficit hit a record high but other indicators, such as consumer spending and inflation remained solid in March. Yet, post-March hard data is expected to show considerable deterioration, which has been embodied in the performances of stocks, the dollar and bonds. Alarmingly and in the name of FOMO to the downside, they have all weakened, implying capital flight out of the US, a phenomenon that is usually reserved for emerging economies at times of economic turbulence. The response is tacit but undeniable backtracking on import taxes in the form of pauses and exemptions, something that is expected to continue in the future as the worst is plausibly behind us. It is reflected in the rally late April but comes with the caveat of the dubious outcome of the mother of all trade wars, between China and the US.

Global oil balance: downgrades of economic growth prospects are usually coupled with cuts in global demand, and it was fully acknowledged in the updated forecasts in April. The EIA reduced its estimate for 2025 by 490,000 bpd, the IEA by 380,000 bpd and OPEC by 100,000 bpd. The oil balance is now seen looser than in 1Q 2025, or at least less tight, depending on which view one shares. Yet, what we saw was some kind of reluctance for global and OECD stocks to swell at the beginning of the year. It helped Brent CFDs, and the futures backwardation remain reassuringly healthy. Yesterday’s US stock statistics, which showed surprise crude and gasoline draws with distillate inventories rising a tad did not reverse the recent trend, for now.

There is, however, another danger lurking, not so much in the background but progressively in the foreground. The marriage of convenience or even a must in 2016, which resulted in the OPEC producer alliance expanding in its effort to increase its control of the supply market seems to be heading towards a divorce. Whether it will be amicable or acrimonious is not entirely clear but the steeper-than-expected unwinding of production constraints in May and possibly in June, together with Kazakhstan’s explicit reluctance to comply will lead to even more available oil in the coming months. Saudi Arabia, as reported by Reuters, appears unwilling to restrict production further and is well placed to see through a period of low-price environment, officials say. Perhaps, the fraying unity is the reason behind the discernible narrowing of Brent and WTI backwardation towards the end of April and the spectacular fall in Brent CFD values. Whilst the anticipated and necessarily lenient US stance towards tariffs might provide demand support or at least prevent it from deteriorating further, it is now the supply side, which will be in focus to prognosticate how global oil stocks and prices will fluctuate for the remainder of 2025.

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