Chart: Surge in Trade Policy Uncertainty Index 4 Times any Prior

Economic uncertainty related to trade policy has spiked to unprecedented levels, driven by erratic political shifts and a barrage of rapidly changing tariffs. While some interpret this as a strategic maneuver, the effects are measurable regardless of intent.

The chart above, based on the Fed’s Economic Policy Uncertainty Index for trade policy, highlights the current surge in uncertainty. The index recently reached 7,983—more than four times the previous record high of 1,946.69, also set during a Trump administration. Compared to the peak observed under non-Trump administrations (1,020.58), current levels are nearly eight times higher.

This degree of policy instability has real economic consequences. Prolonged uncertainty deters investment, hiring, and large consumer purchases. It leaves capital on the sidelines and businesses hesitant to act. While markets often adapt, sustained unpredictability stalls momentum and suppresses growth.

With luck, this volatility will give way to more stable policy—or at least to a new equilibrium businesses can plan around. In economics, predictability may not be exciting, but it’s almost always welcome.

Chart: Baker, Scott R., Bloom, Nick and Davis, Stephen J., Economic Policy Uncertainty Index: Categorical Index: Trade policy [EPUTRADE], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/EPUTRADE.