Trump's tariffs saga
Post number 3
Full analysis of the current trade war situation
π Global reaction πΈ European Union β preparing retaliatory measures if talks fail. Just a few minutes ago, Reuters reported: 'The European Union is likely to approve a first set of targeted countermeasures on up to $28 billion of US imports. - It is intended to include goods such as American beef, grains, wine, wood, diamonds, clothing, etc.'β
πΈ China β strongly opposes tariffs, announced a series of measures - including raising tariffs by 34%, bringing the total tariff to 101%.β - On the other hand, China announced it is ready to enter negotiations to reach a new agreement.
πΈ Japan β requests exemption, promises swift response.β
πΈ Germany β calls for European pressure on the US, and shows willingness for escalation β
πΈ Canada, Mexico, Brazil β examining various responses, including complaints to the WTO. - Canada also announced reciprocal tariffs of 25%.β
- On the other hand, some countries are bowing down and lowering tariffs -βοΈ
1. - Cambodia - will reduce tariffs on selected US imports to 5%, from 35%.βοΈ
2. - Taiwan - President Trump says Vietnam's president told him they would cut tariffs to zero if they could make a deal with the US.βοΈ
3. - United Kingdom - British Prime Minister Keir Starmer seeks a new trade agreement with the United States to remove tariffs.βοΈ
4. - Thailand - will negotiate with the US on 36% imposed tariffs: Prime MinisterβοΈ
5. - Italy - Italian Prime Minister Meloni: I am not convinced that the best way to respond to tariffs is with our own tariffs.βοΈ
6. - Argentina - Argentine President Javier Milei seeks a new trade agreement with the US to reduce the impact of tariffs.βοΈ
7. - Indonesia - will not impose tariffs on the United States, a government delegation is expected to land in Washington this week to begin negotiations.βοΈ
8. - India - announcement from just minutes ago: India is trying to negotiate a bilateral trade agreement with the US to lower tariffs βοΈ
- We see that some countries are indeed interested in negotiations and new trade agreements - and these are definitely positive signs for the market π‘
The real question?
- The full reaction of the countries - how long will it last?
Explanation - the US accounts for 34% of global household consumption. π₯
- They are essentially the world's largest consumer. π
It is impossible for Europe/China/Japan to find someone to buy their goods at the US level. π
If all net exporting countries unite, they still cannot find another consumer like the US.
This makes everything more interesting...
Because whoever understands this understands that this is a war of no choice... and Trump is on the strong side of the mapπ¦
On the other hand - Trump's trade war will not be easy to negotiate πͺ
The aggressive tariffs of the Trump administration, which raised average tariffs from 2% to over 20%, mark the end of the post-World War II global economic order. βοΈ
Economists warn that this policy risks stagnation with inflation, harming growth, and fueling inflation.β οΈ
Allied trust is eroding, complicating negotiations. Threats of retaliation from Canada, China, and the European Union increase uncertainty, forcing companies to reconsider supply chains.βοΈ - Ironically, higher tariffs on Vietnam and Thailand could benefit China, pushing companies back to familiar territory.βοΈ
Experts anticipate ongoing economic disruptions, reduced efficiency of global trade, and a reconfiguration of investment decisions towards regionalism and self-sufficiency - against a backdrop of rising geopolitical tensions. βοΈ
We are entering a period where the world's strongest powers are playing aggressive chess with moves that easily shake international markets.π£
The coming week is critical to understand which way the wind is blowing - towards escalation or reconciliation and negotiation, two options that could determine the direction of markets for violent moves of a hundred points up or downβ³
Possible scenarios for the coming week π
1. Countries will continue to react aggressively - Trump does not back down. It is likely that in such a case, we will see continued declines similar to last week π½
2. More and more countries enter negotiations, seeking a new trade agreement, signs of reconciliation, and hints of de-escalation. This could lead to some calm in the declines π―
3. Trump backs down - Trump sees that the tariffs are affecting rival countries and calls a timeout on tariffs even before they take effect. Such a step is probably the most positive one to expect; it can be estimated that such a step could support a change in direction for leading indices πΌ
Friends, prepare yourselves for trading days; we are expected to see days of historical volatility, and you must come prepared
Study the scenarios, write a clear action plan for each scenario, so you won't be surprised βοΈ
Bonus: A super interesting post by Bill Ackman hints: Freezing tariffs this week before they take effect - an expected and necessary step from President Trump π