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Trump’s Economic Policies Expected to Drive Inflation, Affect Global Markets

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With former President Donald Trump’s historic reelection victory, financial experts warn that inflation is likely to rise in the United States and globally if Trump implements his campaign pledges, which include aggressive tax cuts, strict immigration policies, and high tariffs on imported goods. CNN projected Trump’s victory on Wednesday, securing him a second term in office alongside a Republican majority in the Senate, positioning him to enact a potentially transformative economic agenda.

U.S. stock markets surged following Trump’s win, and the dollar strengthened against major currencies as traders braced for increased inflation and fewer interest rate cuts from the Federal Reserve. Matthew Ryan, head of market strategy at Ebury, noted that a stronger dollar reflects investor expectations that Trump’s policies—particularly on tariffs and immigration—will boost inflation and potentially lead to elevated interest rates.

“Investors are bracing for tariffs… which will push up the price of imported goods for American shoppers,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. Trump’s promise of mass deportations could also raise wage costs for U.S. companies by limiting the labor pool, she added.

Higher Tariffs on Imports

During his campaign, Trump proposed raising tariffs to 10-20% on all imported goods, a drastic increase from the current 2% average, with a 60% tariff specifically on Chinese imports. He has also suggested tariffs as high as 200% on cars manufactured in Mexico or by U.S. companies that relocate production there. According to analysts, these tariffs would act as a tax on imports, increasing costs for consumers and businesses reliant on imported materials.

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Economists warn that higher tariffs could disrupt the Federal Reserve’s interest rate strategy. Nomura analysts indicated that due to anticipated inflation from tariffs, they now expect only one rate cut in 2025, with policy likely remaining on hold until inflation subsides.

Impact on Global Markets and Trade

The effects of Trump’s tariffs could reverberate beyond U.S. borders. If trading partners impose retaliatory tariffs on American exports, global inflation could rise, potentially stunting world trade and economic growth. “A material increase in global inflation would follow, while the ensuing hit to world trade would negatively impact growth,” noted Investec chief economist Philip Shaw and economist Ellie Henderson.

A stronger dollar could also impact global inflation, particularly for countries that rely on commodities priced in U.S. dollars. As the dollar gains strength, these countries may face higher costs for essential goods, which companies would either have to absorb or pass on to consumers. This effect could force adjustments in international markets, with some countries like China potentially offloading excess goods to other nations with lower tariffs, possibly dampening inflation in those areas.

Risks for Key Trading Partners

Economies heavily reliant on U.S. exports, such as Canada and Mexico, may feel the direct impact of Trump’s tariffs. BMI, a market research firm under Fitch Solutions, warned that Mexico, Canada, and other nations with trade surpluses, including China, Japan, Germany, and South Korea, could face pressure to increase imports of U.S. goods. A 60% tariff on Chinese goods alone could cut China’s economic growth by up to 0.8 percentage points over the next two years, according to BMI.

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German exporters could also experience significant setbacks if Trump enacts a 20% tariff on all trading partners. The Ifo Institute for Economic Research in Munich warned that German exports to the U.S.—its largest market outside the EU—could drop by around 15%, potentially posing a severe economic challenge for both Germany and the EU.

As Trump prepares to implement his economic agenda, economists expect a turbulent period for global markets, marked by inflationary pressures, potential trade conflicts, and shifting alliances.

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Democrats Face Internal Battle Over Party Direction Ahead of US Midterms

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With just over two months remaining before the US midterm elections, Democrats are facing a political challenge that extends beyond their efforts to oppose President Donald Trump. The party is divided over its policy direction, with progressives and moderates offering competing ideas about how Democrats can regain support.

The divide has become increasingly visible during this year’s primary elections. Progressive candidates have secured several notable victories, raising hopes among the party’s left wing. Moderates, however, are warning that candidates associated with the progressive movement could struggle in competitive districts and Republican-leaning states.

Both factions say the 2024 election defeat exposed weaknesses in the party, but they draw different lessons from it.

Progressives argue Democrats were too cautious and failed to offer voters a strong economic alternative. They want the party to focus on issues such as lower healthcare costs, higher wages, stronger unions and greater restrictions on corporate power.

Moderates say Democrats need to avoid positions that Republicans can portray as extreme. They believe candidates must appeal to independent and conservative-leaning voters, particularly in closely contested states.

Recent primary results have intensified the debate. In Florida, democratic socialist Angie Nixon defeated moderate Alex Vindman in the Democratic Senate primary. In Michigan, progressive Abdul El-Sayed defeated establishment-backed Haley Stevens, while in California, Aisha Wahab won a special congressional election after facing substantial spending from outside groups.

Progressives view the results as evidence that Democratic voters are becoming less interested in traditional party leadership.

However, winning a primary does not guarantee success in November. Florida presents a major test for Nixon because the state has shifted strongly toward Republicans in recent elections. Her nomination has already prompted debate among Democrats over whether the party should embrace the democratic socialist label.

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At the same time, Democrats in Florida selected former Republican David Jolly as their candidate for governor, highlighting the ideological range within the party.

Polling suggests many voters support economic policies associated with progressives, including higher taxes on corporations and wealthy individuals, government-supported healthcare, paid family leave and a higher federal minimum wage. Yet support for these policies does not necessarily mean voters will choose candidates who identify as progressive.

Democratic voters can hold moderate political identities while supporting populist economic measures. Some cultural issues associated with the left have attracted less support among swing voters.

This creates an opportunity for Democrats to build an economic message centred on affordability and corporate power while avoiding divisive cultural battles.

Trump remains another major factor. Republicans are using progressive primary victories to argue that Democrats are moving toward socialism, while Democrats have an incentive to keep attention on Trump’s record and economic concerns.

The November results could shape the party’s direction well beyond the midterms. A strong Democratic performance could strengthen either moderates or progressives, depending on which candidates succeed.

The outcome may also influence the 2028 presidential race. For now, Democrats face a shared objective: defeating Republicans in November while managing a growing dispute over what the party should become.

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Two Killed After Car Deliberately Hits Pedestrians in Caen

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Two people were killed and several others injured after a car was deliberately driven into a group of pedestrians outside a railway station in Caen, Normandy, French authorities said.

The incident happened near Caen railway station, where a vehicle struck people in a street opposite the station. Calvados prefect David Claviere said the driver had deliberately driven into pedestrians.

Seven people were reported to be in critical condition, while three others suffered less serious injuries. Emergency services and security personnel quickly responded to the scene, which was later sealed off as investigators began examining what happened.

According to French media reports, the vehicle was a black German-made car that struck people waiting near a tram stop. The incident reportedly followed an altercation, although authorities have not established a clear motive.

The suspect, a 26-year-old man born in Russia, fled the scene after the crash. Police arrested him later in the evening in Ouistreham, about 20 kilometres from Caen.

Authorities said the suspect was not previously known to France’s intelligence services. He was known to police only in connection with traffic offences.

Senior Caen security official Bruno Coutanceau said the victims were believed to be men between the ages of 17 and 40. Most of those injured were thought to be foreign nationals.

French authorities have opened an investigation into murder and aggravated intentional assault. Investigators are expected to examine witness statements, surveillance footage and other evidence to establish the circumstances leading to the incident and determine whether it was linked to the reported altercation.

The attack caused significant disruption around the railway station as emergency workers treated the injured and police secured the area.

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Caen Mayor Aristide Olivier described the incident as an “absolute tragedy” and praised emergency and security services for their rapid response.

The authorities have not indicated that the suspect was linked to any extremist organisation, and his motive remains under investigation.

The incident has prompted heightened security around the station while investigators continue their work. Officials are expected to provide further details as the investigation progresses and the condition of those critically injured becomes clearer.

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SpaceX Announces $100 Billion Louisiana Starbase to Expand Starship Launches

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Elon Musk’s SpaceX has announced plans to build its largest launch facility yet in Louisiana, a $100 billion project designed to support thousands of Starship missions each year and significantly expand the company’s presence beyond Texas and Florida.

The new facility, named Starbase, Louisiana, will cover about 125,000 acres, or 50,585 hectares, in the southern US state. Construction is expected to begin next year, with SpaceX targeting its first Starship launch from the site in 2029.

SpaceX said the facility would support missions to Earth orbit, the Moon, Mars and beyond. The project forms part of the company’s broader plans to increase launch capacity as it pursues ambitious goals in space exploration, satellite services and artificial intelligence.

The company said the Louisiana base would create more than 3,000 direct jobs. Louisiana Economic Development estimates that a further 8,100 indirect jobs could also be created through related economic activity.

According to the agency, workers at the facility are expected to earn average wages nearly three times higher than the current regional average. Officials said the project could establish Louisiana as a major centre for next-generation aerospace operations.

“The historic project will establish Louisiana as a global hub for next-generation aerospace, with the capacity and infrastructure needed to dramatically increase launch frequency and expand access to space,” the Louisiana Economic Development agency said.

The Louisiana site will share its name with SpaceX’s existing Starbase operations in Texas. In 2025, residents in part of Cameron County, where the company carries out testing and development work, voted to incorporate the area as a city called Starbase.

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The announcement comes as SpaceX pursues an aggressive expansion strategy. Musk has outlined plans for missions to Mars, expanded Starship operations and major investments in artificial intelligence and computing infrastructure.

Earlier this month, SpaceX and Musk’s electric vehicle and robotics company Tesla announced plans to build a $16.8 billion AI chip manufacturing complex in Texas known as Terafab. The proposed facility is intended to support growing demand for computing power for AI, robotics and related technologies.

SpaceX is also facing increasing scrutiny from investors following its public market debut in June, when its shares began trading on the technology-focused Nasdaq in what was described as the largest stock market debut in history.

The company’s stock has fallen more than 30% from the highs reached shortly after trading began, although it remains above its initial offer price of $135.

Investors are now watching whether SpaceX can balance the enormous cost of its expansion with the need to deliver sustained profits. The planned Louisiana Starbase represents one of the company’s biggest commitments yet, with construction expected to begin in 2027 and launch operations scheduled to follow two years later.

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