Trump tariffs can mean a huge ‘shock’ for the world trade systemthe largest since the collapse of the Breton-Woods system in 1973 that ended fixed exchange rates.
Thus, the experts of Deutsche Bank have been shown after European stock markets, and also the Asians, begin to be affected by the domino effect of the commercial war undertaken by the US president.
IBEX 35 and European Stock Exchange
In the first quotation bars on Monday, European stock markets have registered falls above 1 %with the euro quoting below $ 1.03, given the imminent imposition of tariffs of President Trump, Mexico and Canada, 25 %, and 10 % to China.
At the beginning of the session, The bag that fell most is that of Frankfurtwith 1.95 %; followed by Paris, with 1.88 %; Milan, with 1.54 %; Madrid, with 1.30 %, and London, with 1.23 %; While the Stoxx50 euro, an index in which the most capitalization European companies are traded, 1.94 %are also left.
The euro records an outstanding fall, of 1.18 %, and the change is located at $ 1,024, getting closer and more to parity, and standing at November 2022.
The markets, in addition to the distortions that US tariffs and Canada’s responses and doctor in world trade can cause, fear that This is the beginning of a series of similar measures that will also affect the products of the eurozone.
The main indices of Asian bags too They quoted on Monday down. In this way, the Nikkei index of the Tokyo Stock Exchange closed Monday’s session with a 2.66% drop, while the selective Kospi of the Seoul bag left 2.52% and the reference index of the Taiwan bag lost 3.53%.
On his side, the Hang Seng of the Hong Kong Stock Exchange quoted with a slight fall of 0.18%, while the indexes of continental China remained closed. Outside Asia, the Australian Asx 200 closed Monday’s session with a 1.79%decrease.
“President Donald Trump’s decision to impose 25% tariffs on Canada and Mexico and an additional 10% tariff to China from next Tuesday is only the first blow of what It could become a very destructive global commercial war“, warns Paul Ashworth, chief economist for North America of Economics.
Increased inflation
In this sense, the expert points out the current tariffs could sink the Canadian and Mexican economies in recession at the end of this year and result in a faster increase in US inflationso “the window so that the Fed resumes the cut of interest rates at any time during the next 12 to 18 months has just closed suddenly.”
“The most silly commercial war in history”
Mary Lovely, principal researcher at the Peterson Institute of International Economics, has spoken in the same line, who has warned the risk of imports to imports on Mexico and Canada. “It is a huge bet. It is a recipe to decelerate the economy and increase inflation,” said the expert.
The criticism of Trump for using tariffs as a weapon against their enemies (and friends) arrive from all fronts. The Wall Street Journal has described Donald Trump’s economic policy as “the most stupid commercial war in history.” In an opinion article, the American newspaper ensures that Trump’s justification for an “economic assault” to Canada and Mexico “makes no sense” and warns that the strategy “could end in disaster.”
Economists and trade experts are perplexed at Trump’s orders and are deeply concerned because the levies to Canada and Mexico “They can cause chaos in the supply chain in the interconnected US economy, increasing prices”.
“Imposing tariffs of up to 25% to our closest commercial partners runs the risk of decimating the economic power of North America, on which the United States depends. Why would you want to burn your own home?“, defended Christine McDaniel, former commercial official in the government of President George W. Bush, who is now a researcher at the Mercatus Center at the George Mason University.
