Avril 2025
IMD World Competitiveness Center (175 pages).
2025 has barely gotten underway and yet significant trade tensions, policy shifts, and weakened business and consumer confidence appear to have set the tone for the year. The aggressive trade stance adopted by the United States – which notably includes substantial tariff hikes on imports from China, Mexico, and Canada – has, as we know, triggered retaliatory measures, re-escalating trade wars. In 2018, during his first term, President Trump started increasing tariffs on goods from China -first on “only” 8% of Chinese exports but covering over 66% by early 2020.
While the extent, magnitude, and duration of current tariff increases remain uncertain, past lessons from the 2018 US-China trade war suggest that the direct participants will all experience economic losses (Caliendo and Parro, 2023), while the impact on other economies will be more difficult to predict; there may be some winners – especially in Southeast Asia where production can be more easily relocated (Fajgelbaum et al., 2024).
Inflationary pressures remain a concern, particularly in industries heavily reliant on imported materials, such as construction. Higher tariffs on steel (and potentially lumber) are expected to increase development costs, putting further stress on an already-constrained housing supply.
Making housing more affordable is the top priority for most of the respondents of the 2025 IMD Smart City Survey. In 110 out of 146 cities, affordable housing is mentioned as a priority by at least half of the respondents in the city. The issue is particularly felt in Dublin or Vancouver, where about 90% of the IMD Smart City Survey respondents expressed concern over housing affordability. Respondents in the Middle East agree: about 80% of respondents from AlUla or Dubai identify affordable housing as a priority area.
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