Trump deals markets 'hammer blow' as tariffs confirmed
President Trump has dealt markets yet another hammer blow in confirming that tariffs aimed towards Canada, Mexico and China will go ahead as planned on Tuesday.
While the timing and the size of the trade restrictions was very clearly telegraphed by the President, Trump has cried wolf before, and investors were bracing for the possibility of last minute deals that would delay their implementation.
The retaliatory responses that we’ve seen thus far have been relatively restrained and merely targeted to specific sectors, rather than applied holistically.
Authorities appear keen to avoid an escalation in the tit for tat levies that would trigger a full-blown trade war, and we remain optimistic that cool heads will ultimately prevail.
Yet, while fresh negotiations are not off the table, the path towards reaching deals that could dilute the economic impact of the tariffs will be a bumpy one, at best.
In the environment of greater trade protectionism, and heightened fears over European security, the safe-haven dollar looks likely to remain well bid for now.
But, with economic news out of the US taking a clear turn for the worse of late, the greenback has actually found gains rather hard to come by so far this week.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
