The TPU Index is based primarily on three components:
- the evaluation of quarterly reports by publicly traded US companies,
- the analysis of articles published by seven leading US media outlets, including The New York Times and The Wall Street Journal, and
- a stochastic volatility model for the development of US tariffs.
The authors show that a rising TPU index is accompanied by a significant decrease in business investments and negatively impacts capital growth. It is noteworthy that it is not fixed tariffs, but rather the uncertainty about potential tariff changes that has a stronger influence on economic indicators.
Significant fluctuations in the index were observed especially during Trump’s first term in office between 2017 and 2019. During that period, he repeatedly threatened to introduce tariffs, for example against Mexico, as well as on steel, aluminum, and certain high-tech products from China.
A significant easing was recorded starting in January 2021 – under the Democratic administration of President Joe Biden.
In the run-up to the US presidential election in November 2024, the TPU index again reached the high level seen during Trump’s first term – and has continued to rise ever since.
