The threat of US tariffs is one of the hot topics in financial markets, and investors are closely evaluating potential actions by the White House.
Thierry Wizman, global forex and rates strategist at Macquarie, offers a vision of the endpoint of this problem.
“He (Trump) would rather get the concessions he demands from US trading partners, his allies, than impose sanctions on them,” he said.
“Trump’s internationally oriented advisers may realize that returning manufacturing production to the US would not be practical as a short-term proposition,” he added.
“Only against China do we see less room for a transactional approach, and therefore we should expect punitive tariffs,” he argued.
“That’s because China, in this context, is different. It is seen as a strategic competitor to the US, and in Trump’s circles, a strategic threat.”
Macquarie expects dollar/yuan to hit 7.50.
Whatever happens, more market volatility is the most likely scenario at least in the short term.
“The market hit on the news and the rejection of the tariff agenda on Monday may provide a glimpse into trading next year, with the return of policymaking via tweets heralding a new period of increased volatility across assets,” said Mark Haefele, Global Wealth Management Chief Investment Officer at UBS.
Source: Reuters (Stefano Rebaudo)
