Following Donald Trump’s announcement of tariffs on major US trading partners, financial markets that had bet on avoiding trade conflicts are recalibrating the risk of a severe global downturn, renewed inflation, and a delay to Federal Reserve rate cuts.
Markets that had concluded Trump was primarily bluffing and bluste were shocked by the US president’s weekend orders for extra tariffs of 25% on imports from Mexico and the majority of goods from Canada, as well as 10% on goods from China.
Following Trump’s announcement on Monday that he would halt fresh tariffs on Mexico for a month and hold additional talks, the initial risk-off response subsided. The United States also delayed imposing tariffs on Canadian products later in the day.
Part of the news may have been priced in because Trump, the self-declared “tariff man,” has been hinting at his plans for months. Additionally, he is a dealmaker who has a track record of shifting course when he receives what he desires from trading partners. Since nobody can predict what will happen next, volatility should continue to be high.
The tariff gun is loaded but not fired, so we’re going to postpone this for a month,” stated Art Hogan, chief market strategist at Boston-based B. Riley Wealth. Because there is a genuine chance for some sloppy markets if he simply pushed this along.
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