Donald Trump's Tax Move Continues to Resonate in Global Markets
The customs duty moves that emerged following Donald Trump's return to the presidential office in the United States continue to resonate worldwide. Trump's tariffs, particularly targeted at Mexico, Canada, and China, threaten trade balances and global growth.
Warning from the Bank of England Clare Lombardelli, Chief Economist of the Bank of England (BoE), indicated that U.S. tariffs pose a serious risk to economic growth in the UK and other countries. Lombardelli stated that the bank's Monetary Policy Committee would closely examine trade developments, saying, "We know that barriers to trade provide no economic benefit whatsoever."
Strong response from Mexico Mexican President Claudia Sheinbaum responded strongly to Trump's plan to impose a 25% tariff on Mexican products. She indicated that Mexico is ready to retaliate, emphasizing that tariffs would not solve issues like illegal immigration and drug trafficking. Instead, Sheinbaum called for dialogue and reminded that Mexico has taken steps in these matters.
Metal markets could face significant pressure Citi analysts predict that Trump's tariffs on steel and aluminum imported from Canada and Mexico will raise the prices of these metals in the U.S. domestic market. It is noted that the U.S. imports 70% of its aluminum needs, with 60% of this coming from Canada. Similarly, 24% of the steel used in the U.S. is met through imports, a significant portion of which is sourced from Canada and Mexico.
Production moves from tech giants Major technology companies like Microsoft (MSFT), Helmerich and Payne (HP), and Dell Technologies (DELL) are accelerating their production in anticipation of increased tariffs on China. According to Nikkei Asia, these firms are focusing on boosting the supply of electronic components while planning to shift their production outside of China.
Automotive sector at risk It is suggested that Trump's tariffs could seriously impact the profits of U.S. automakers, particularly General Motors Company (GM). Approximately 1.4 million vehicles are shipped annually from Mexico to the U.S., with 90% of these going to American buyers. Analysts warn that tariffs could increase the prices of SUVs and pickup trucks.
Emerging markets under pressure JPMorgan (JPM) forecasts that U.S. trade policies and uncertainty in the Chinese economy could lower growth rates in emerging markets. According to the bank's report, growth in emerging markets could drop to 3.4% by 2025, with a more pronounced decline expected outside of China.
Impact of tariffs on Canadian consumers Goldman Sachs noted that Trump's tariffs on Canada could lead to higher fuel prices for American consumers. It is assessed that the U.S., which imports approximately 4 million barrels of Canadian oil daily, could be significantly affected by this situation.
China's response may impact the dollar Allianz (ETR:ALVG) Global Investors indicated that China may retaliate against Trump's tariffs, which could lead to a depreciation of the dollar. It is mentioned that retaliatory actions by China could harm the U.S. economy and hinder the rise of the dollar.
Warning from China to Trump Chinese state media warned that Trump's tariffs could lead to a destructive trade war between the two countries. Publications of the Chinese Communist Party emphasized that the continued use of tariffs as a political tool by the U.S. could result in significant losses for both sides.
Japanese companies may also be affected The Japan Business Federation stated that Trump's tariffs could adversely affect Japanese firms. Japanese manufacturers are considering shifting their shipments to regions less impacted by these tariffs.