Donald Trump’s announcement of tariffs on major US trading partners has caused financial markets that had bet on avoiding trade wars to reassess the likelihood of a severe global downturn, renewed inflation, and a delay to Federal Reserve rate cuts.
The US president’s weekend orders for extra taxes of 10% on goods from China and 25% on imports from Mexico and most Canadian goods startled markets that had previously believed Trump was primarily bluffing and bluste.
Trump announced Monday that he would halt new tariffs on Mexico for a month and have additional talks, which calmed the initial risk-off response. Additionally, the US delayed imposing taxes on Canadian imports later that day.
Trump, the self-declared “tariff man,” may have priced in part of the news because he had been hinting at his plans for months. Additionally, he has a history of reversing course when he receives what he wants from trading partners. Volatility should continue to be high since nobody knows what will happen next.
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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