Channelling The Bangles, Deutsche Bank strategist Jim Reid predicts a “manic Monday’ in the markets.
He tells clients:
Standby for a manic Monday as the world tries to come to terms with the “shock” tariff announcements from Mr Trump’s administration on Saturday night. I say shock but all Trump did was follow through on exactly what he’s been saying he’s going to do since November. The market has refused to take that threat seriously though, completely under-pricing the risks. So, this leaves the weekend news as a severe shock.
Reid points out that the 25% tariffs on Canada and Mexico, and an additional 10% on China’s imports, will have a sizeable impact:
These three countries make up around 40% of imported US goods, at around $1.35tn. To put this is some perspective, in the first Trump administration, the US targeted around $350bn of Chinese goods. So this is huge versus anything seen for decades with regards global trade and at face value takes us back to the protectionist period between the two world wars in terms of scale of tariffs.
And for Canada and Mexico, he adds, it could be a sharp economic shock:
In terms of implications, if implemented and prolonged, Canada and Mexico would likely go into an imminent recession and potentially see a bigger shock than Brexit was for the UK.
Source: The Guardian
Recent Comments