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Frank Kelly’s Geopolitical Week Ahead | January 26, 2025

1/26/2025

Will the Trump Tariffs on Canada, Mexico, and China begin this week? Rubio Goes to Latin America, U.S. Senate confirmation hearings continue, and a big week for Central Banks.

Francis (Frank) J. Kelly

Founder & Managing Partner, Fulcrum Macro Advisors LLC and Senior Political Strategist for DWS

Will the Trump Tariffs on Canada, Mexico, and China begin this week?
Rubio Goes to Latin America
U.S. Senate confirmation hearings continue
Big week for Central Banks
Global economic radar screen
U.S. Financial Regulatory Week Ahead

Will the Trump Tariffs on Canada, Mexico, and China begin this week?

It will be a very busy week ahead, both politically and economically. President Trump has threatened to put 25 percent tariffs on Canada and Mexico and 10 percent tariffs on China unless there is progress on illegal immigration and fentanyl trafficking (he placed 25 percent tariffs and a travel ban on Colombia Sunday for refusing to take back deported Colombians). The question now is, will there be some progress, or are the tariffs a fait acompli?

Rubio Goes to Latin America

Meanwhile, Secretary of State Marco Rubio begins a series of meetings in Latin America, traveling to Guatemala, El Salvador, Costa Rica, and the Dominican Republic. While Rubio is expected to focus on migration issues, he will also likely discuss the situation in Venezuela and trade and security issues. It is Rubio’s first trip as Secretary of State, indicating that Latin America will be a significant focus of the new Trump Administration.

The Lunar New Year celebration begins in Asia

In Asia, we note Indian Foreign Secretary Vikram Misri is traveling to Beijing for two days of meetings. This is the second high-level set of meetings between India and China in the last two months, all to improve tense relations between the two countries. The meetings take place as most of the major markets in Asia get ready to celebrate the Lunar New Year and China celebrates its annual eight-day Spring Festival – which serves as a major consumer spending event in China and will be indicative of how strong the Chinese economy is as the country continues to struggle with its massive real estate crisis.

European renewal of sanctions on Russia?

In Europe, EU Foreign Ministers meet this week to discuss how to move forward on renewing sanctions on Russia. Hungary is trying to block the renewal of sanctions, causing significant tensions. The ministers are also expected to discuss EU-US relations and how best to work with the new Trump Administration.

U.S. Senate confirmation hearings

In the United States, three of President Trump’s arguably most controversial nominees will get their Senate confirmation hearings this week. FBI Director-designate Kash Patel, Director of National Intelligence nominee Tulsi Gabbard, and Health and Human Service Secretary nominee Robert Kennedy will each appear before the respective U.S. Senate committees.

Gaza

Turning the Middle East, the ceasefire between Israel and Hezbollah expires today. What happens next is unclear. The expiration comes as the fragile ceasefire with Hamas continues to hold and as Israeli and U.S. hostages are slowly being released.

Global economic radar screen

It’s a big week for central banks as the Federal Reserve, the European Central Bank, the Bank of Canada, and the Bank of Brazil all meet to decide interest rates.

Beyond the central bank action and breaking down the week by region, the U.S. will see Q4 GDP numbers, December PCE inflation print on Thursday, and Q4 employment cost index figures on Friday. These come after the Conference Board’s Consumer Confidence report and durable goods orders come out on Tuesday.

In Europe, January CPI flash numbers are out Friday for Germany and France, and the Eurozone CPI’s following Monday.

In Asia, markets are closed in most major markets for the Lunar New Year, and in Australia, markets are closed for the Australia Day holiday. But China – celebrating an eight-day Spring Festival holiday – will release January PMIs, and Japan will release its CPI print, PMIs, and industrial production figures.

U.S. Financial Regulatory Week Ahead

The two key financial services-focused committees in Congress – the House Financial Services Committee (HFSC) and the Senate Banking Committee are beehives of meetings and strategy sessions.

The HFSC has announced a full agenda for February, holding at least five hearings ranging from “Making Community Banking Great Again” to hearings on crypto and the California wildfires and the insurance industry to examining policies to counter China.

The Senate Banking Committee is also beginning to announce a series of hearings in February, starting with one looking at debanking in America.

But Washington’s regulatory world is chattering amongst themselves, all asking the same question: Where are President Trump’s much-anticipated nominations for the financial regulatory agencies? So far, the President has nominated only one regulator – Paul Atkins for SEC Chair. Moreover, two Biden regulators are still in their chairs and working away – CFPB Director Rohit Chopra and Acting Comptroller of the Currency Michael Hsu. Having Chopra there is driving banks crazy as they are hoping for a more friendly regulator and fast.

And when will we formally hear who is replacing Federal Reserve Vice Chair Michael Barr, overseeing supervision? There are only two options for President Trump as there are only two Republicans on the Board (aside from Fed Chair Jay Powell) to pick from: Christopher Waller and Michelle Bowman. Everyone assumes Bowman will be the pick as she is a former state bank commissioner and a community banker. But for whatever reason, nothing has happened. We are monitoring the nomination process closely.

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Francis (Frank) J. Kelly

Frank is the Founder and Managing Partner of Fulcrum Macro Advisors LLC, a political risk advisory firm based in Washington, DC. He is the senior political strategist for DWS.

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Frank Kelly’s Geopolitical Week Ahead | January 26, 2025

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