So it sounds like Trump is intent on going through with imposing or increasing tariffs on its main trading partners: Canada and Mexico, as well as China. He's threatened China with 60% tariffs on day one of his term...
But I didn't expect him to use combatting drugs as the excuse....? I'm fairly sure there's no integrity in the reasoning, that's just a plausible excuse to justify a policy Trump was intent on implementing whatever.
In the short term at least expectations around Trump's economic policies seem to be benefitting America and to the detriment of its trading partners....
Other currencies hit.....
Trump's tariff announcements seem to have been sufficient to throw foreign exchange markets into disarray, and it would seem that the currencies of those countries threatened with US tariffs have been hit the hardest...
On the back of just the potential of tariffs the Canadian dollar dropped by 1.4% and the Mexican peso fell by over 2%. In China, the People’s Bank intervened to stabilise the yuan, which had dropped by 0.4%
The Powerful US Dollar...
Meanwhile the US dollar has surged nearly 3% since the election, driven by speculation that Trump’s mix of tax cuts and protectionist policies will continue pushing it higher.
NB Trump is really up for this, he's threatened BRIC nations with 100% tariffs if they try creating a currency to rival the dollar...
I'm not sure that would be wise, just given the sheer population imbalance and the rising middle class markets in India, China and Brazil. There's a lot of money to be made by trading with each other, and Europe of course.
But are tariffs the solution to America's economic woes...?
Although Trump’s tariffs didn’t explicitly target Europe, Japan, or South Korea, their stock markets also suffered, reflecting broader fears of a global trade war disrupting supply chains and profits.
And I don't think this can be good for everyone, it's going to hurt the USA as well as Europe and wider markets, especially those countries which rely on exporting products.
The auto industry seems to have taken a HUGE HIT. Shares in major manufacturers like VW, and Nissan— with significant production operations in Mexico have plummeted. In a single day, over €10 billion was wiped off Europe’s largest carmakers’ market value.
Uncertainty = good for crypto...
We don't know how bad future trade wars are going to be, or what the impacts will be, this means a lot more uncertainty going forwards, which could potentially be good for crypto, which can act as a hedge for any nation against currency fluctuations.
Wouldn't be amazing to see nation states to start snaffling up billion dollars of BTC for just this reason, bizarre, very bizarre, but profitable for us handful of people who got in early!
Final Thoughts... who gets hurt the least...?
I mean maybe I'm missing something here, maybe this is a stroke of genius... America has been hurt, relatively speaking, by other countries outpacing its economic growth, so maybe this is all the USA can do: implement a policy which slows its own growth, but slows that of its competitors even more...?
I mean that would be a relative win.