The global stock markets were wiped out by more than 2 trillion US dollars on Thursday when investors enjoyed new tariffs on Donald Trump. The markets were unprepared, how steep and how wide the tariffs were.
“The markets are obviously bad for us and global growth,” Derek Holt, Vice President and Head of the capital markets Economics at Scotiabank.
The sale shows a key question in the heart of Trump’s trade policy. What he announced on Wednesday. The United States places a minimum tariff of 10 percent in almost every country, with certain nations receiving a higher so -called “mutual” tax, such as China, 34 percent to 20 percent and Vietnam with 46 percent.
On the one hand, the US President wants to improve 70 years of global trade and fundamentally change the way in which the world does business. However, he also distributes exceptions to protect American companies, such as for the auto industry and the Taiwanese semiconductors.
A message embedded in the market sale: Trump cannot have it in both directions.
Trump announced comprehensive ‘mutual’ tariffs in dozens of countries. Who met – and was not – met? According to Trump, Canada demolished the United States and imposed strong tariffs on imported American dairy products. Is he right?
“The United States cannot have its cake and also eat it,” says Karl Schamotta, chief market strategist at the financial service company Corpay.
According to the Schamotta, the United States has built the global trading system in the past 70 years and was the main beneficiary.
“If you overturn this world order, you will pay for the costs,” he says.
“The question is whether (Trump) will have the stomach to stick to it and to withstand the political pressure and the negative consequences associated with (this policy).”
Car manufacturers pause production
Shared markets are not the only ones that show signs of pain.
Hours after the tariff termination, Stellantis, owner of the Jeep and RAM brands, Production in production kept in some plants in Canada and Mexico. This was generally expected because Trump’s vehicle tariff of 25 percent vehicles separate would apply to non -American parts used in vehicles that were manufactured outside the USA
Car manufacturer Stellantis has confirmed that it has switched off its assembly plant in Windsor, Ontara, especially because of US tariffs for imported vehicles for two weeks. Unifor Local 444 estimates around 4,500 people work in various jobs and shops in the factory.
However, the production of production in these plants will affect American production. For Stellantis, the break will affect some of his US drive train and stamp devices that support these factories, it said.
This will lead to the layoffs of American workers.
The break affects around 3,200 people in Canada and about 900 in the USA, Stellantis said in a statement to CBC News.
Canada retaliation against the trade policy of US President Donald Trump with a tariff of 25 percent to vehicles that are imported from the USA and do not correspond to the Canada USICO Agreement. Prime Minister Mark Carney said Trump’s tariff plan means that the global economy “is fundamentally different today than yesterday”.
So investors lose their shirts. American workers are released and the tariffs have not even been fully imposed. In the meantime, Canada has issued a matching tariff of 25 percent to vehicles produced in the USA.
BMO, Sal Guatieri’s senior economist, says we have no way to know how much worse things will be.
“The big question now is: how aggressively other countries result, and the president will then pursue threatened countermeasures, escalate the trade war dramatically and increase the risk of global and US recession?” wrote Guatieri.
Textiles, food exposed to the most tariffs
Customs are a tax on American companies. The budget laboratory at Yale University crawled the numbers and found The announcement on Wednesday has increased the average effective tariff rate in the USA to 22.5 percent, the highest since 1909.
Budgetlabor’s business director, Ernie Tedeschi, says that the new tariffs will increase prices by 1.3 percent. That means wrote in a social media contribution. All this year’s tariffs will increase the prices by 2.3 percent, he said, which corresponds to an average loss of $ 3,800.
Tran nhu tung, chairman of a textlinvestment group Thanh Cong, says that the US tariff effects could mean more business for countries such as Canada to compensate for lost American orders.
The budget laboratory was textiles and clothing for the products that were most exposed to Trump’s taxes. It is said that the prices for textiles will increase by up to 17 percent if all of the tariffs announced so far are fully implemented.
The food is also hit disproportionately and increases by 2.8 percent from all taxes.
This was chosen by a president who was chosen not least by the voters who were concerned about the increasing cost of living.
Trump’s trade secretary Howard Lutnick sold the rounds on financial news channels as markets on Thursday. Bloomberg monitoring The host Jonathan Ferro asked the question that overshadows the entire trade policy: “How much pain are you ready to tolerate? How much market pain are you ready to tolerate?”
Lutnick, a successful investment style, who is a long -time friend of the President, was criticized as one of the votes in the administration that is pushing for higher, harder tariffs regardless of the costs.
The support or frustration on the tariffs of US President Donald Trump in Canada divided the politicians according to party borders and caught the consumers in the middle.
“What will happen is that people will recognize that it is the great American economy that the winner is here. And anyone who doubts about it, and everyone who takes Donald Trump short, or anyone who doubts the strength and strength of the American economy makes a stupid bet,” said Lutnick.
However, he started that these tariffs will mean difficulties for anyone who buys a lot of everything that was done outside the USA
“Sure, importers will find it difficult to find out what to do because they have found the cheapest production in the world. It is time to bring this production home.”
In other words, he wants American companies to work cheap things to repatriate this production to the USA, where they would have to pay more to employees. That would increase the price for American consumers.
The question in the coming weeks and months is whether the administration sticks to their weapons and pushes for this return, regardless of the price they will pay when consumers repeatedly increase the tank and prices.
