ISA Monthly Issues to Watch: June 2025
Uncertainty Over US Tariffs
June will be another critical, and likely volatile, month for global trade. This is the last month that the Trump Administration’s “reciprocal” tariffs will be on hold, as they are scheduled to go into effect in July. Expect a great of negotiations between the United States and those countries that face significant tariffs. Likewise, the US’ proposed 50% tariffs on all goods imported from the European Union are also scheduled to go into effect in July. However, both sides have expressed a willingness to negotiate some form of preliminary trade deal. Meanwhile, the Trump Administration recently raised tariffs on steel and aluminum imports from 25% to 50%, and could yet again raise tariffs on Chinese imports amid a growing rift between the world’s two largest economies. Amid all of this uncertainty, the one thing that is certain is that businesses, investors and consumers will suffer amid this trade chaos.
The War in Ukraine
Russia has dramatically stepped up its missile and drone attacks on targets across Ukraine in recent months. At the same time, Russia is preparing for a summer ground offensive that is likely to struggle to gain ground and to cause significant casualties on both sides. Ukraine, despite the pressure that it is under, has shown that it can carry out sophisticated surprise attacks on targets deep inside Russia. As a result, both sides are showing major signs of frustration and fatigue as Russia tries to wear down Ukraine’s resistance at great cost to itself. Meanwhile, efforts to broker a longer-term ceasefire between the two sides are unlikely to make significant progress, as Russian President Vladimir Putin appears to be in no mood to end the war at this point.
Inflation and Deflation
Inflation rates will be closely monitored in June as they can go in either direction this month. On one hand, falling energy prices have pushed down inflation rates in most economies in recent months. However, the impact of tariffs imposed by the Trump Administration, and the retaliatory tariffs imposed in response, are expected to fuel new inflationary pressures in the United States and some other economies in the coming months. Moreover, inflationary pressures remain significant in many other countries. In contrast, China’s battle with deflation will continue, as demand levels in the world’s second-largest economy remain weak.
South Korea’s Election
The most important election taking place in June will be South Korea’s presidential election, which is taking place after months of political turmoil in that country. Since President Yoon Suk-yeol attempted to impose martial law and then was impeached when his power grab failed in late 2024, South Korean politics has been in a state of flux. In this month’s election, opinion polls show that the candidate of the liberal Democratic Party of Korea (DPK), Lee Jae-myung, holds a sizeable lead over his right-wing rival, Kim Moon-soo. This election will take place at a time when South Korea’s lengthy run of economic success is being jeopardized by global trade tensions and the country’s ongoing demographic collapse.
The Spread of AI
Amid all of the noise surrounding rising geopolitical and trade tensions, the spread of artificial intelligence (AI) has continued. Increasingly, the focus is on agentic AI, a form of artificial intelligence that can learn from experience, automatically make decisions, and then take action on its own. As agentic AI needs less human oversight, there are concerns that it will lead to dramatic job losses in many sectors of the workforce. At the same time, many businesses are struggling to utilize AI to its fullest potential, leading to claims that AI is more hype than reality. However, we continue to expect AI to have a massive impact on the economy and on most sectors of the economy in the months and years ahead, even if its growing influence is being lost amid all of the noise.
Trump’s Cognitive Health
As the world learns more about the cognitive decline of former United States President Joe Biden during his final years in office, there is more attention being paid to the cognitive health of his successor, President Donald Trump. In recent weeks, President Trump has given a series of rambling speeches that have called into question his own cognitive health. As he has amassed a great deal of power over the Republican Party and the current administration in the White House, any health issues, cognitive or otherwise, would be highly disruptive. Later this month, President Trump will turn 79 and this will inevitably raise questions about age limits for political leaders, whether in the United States or elsewhere.