- US President Donald Trump’s decision to impose tariffs on US imports of steel and aluminium products has reignited fears of trade protectionism and rattled global financial markets.
- While the direct economic impact of these actions is limited so far, investors are worried about a disturbing trend of rising trade confrontation that could backfire on the US economy, prompt global retaliation and disrupt the hard-earned recovery in global trade and growth.
- While we still assign a low probability to an all-out trade war, markets are starting to reprice the chance of more selective trade disputes
Turning protectionist rhetoric into tariff action
US President Donald Trump has just signed a Presidential Order to impose 25% and 10% tariffs on the US imports of steel and aluminium products respectively, with some exemptions. These moves have come after specific measures against imports of Chinese solar panels, washing machines and aluminium foil earlier in the year. The move suggests that Trump is getting serious about protectionism, turning rhetoric into action. The scale of any future protectionist moves is uncertain, but the US administration now focuses on an upcoming intellectual property report, which could pave the wave for further restrictions on China. The related resignation of Chief Economic Adviser Cohn also bodes ill for further protectionist measures...
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