In a little more than two weeks, President Trump’s full effects will come into force (finally).
The White House wrote last week Governments around the world inform you about the export hikes You will be confronted if you do not agree with the USA and say that the sanctions will come into force on August 1st.
Of course, international markets have stared in similar deadlines in the past, just so that they are pushed back in the eleventh hour.
As a result, Wall Street learned to take the threats of the Oval Office with a pinch of salt – to the point The CEO of JPmorgan Chase, Jamie Dimon, fruded it.
Analysts are not the only ones – it is also for governments Preparation for another game chicken, wrote Jim Reid from Deutsche Bank in a note of Assets this morning.
“In the early morning hours of Saturday, Mr. Trump’s inpatient closet was reopened, and a letter was sent to the EU and Mexico, in which they were exposed to 30% tariffs on August 1st. To be fair, Trump threatened the EU with a tariff of 50% so that they could say that this is an improvement,” noticed Reid.
“The market will generally think that this is largely a negotiation tactic and that we unlikely to see such prices that we will not see it.”
The reaction of the European Union was measured. The President of the European Commission, Ursula von der Leyen, announced, for example, a delay in the countermeasures on Sunday, which came into force this week in response to America’s sanctions against steel and aluminum.
This weekend, reporters said of the Leyen: “The United States sent us a letter with measures that would take force, unless there is a negotiated solution. Therefore, we will also expand the suspension of our countermeasures by the beginning of August.
“At the same time, we will continue to prepare for the countermeasures so that we are fully preparing.”
Therefore, markets and governments will “hope and expect diplomacy to run out,” added Reid.
But he continued: “At some point a bluff could be called up. Trump is currently under pressure to be relatively stable with the US risk.
Just another tactic
The Goldman Sachs -Analyst Sven Jari Stehn wrote over the weekend that the 30% tariff announcement by President Trump was a “surprise” in view of the “surprise” more constructive tone The two parties Had beaten in the past.
Nevertheless, Stehn added that even this concern could be undermined by the fact that the White House may be used again with threats to speed for trade agreements.
He wrote: “The threat of President Trump could certainly be a negotiation tactic, and (for now) we claim our basis that a” framework contract “can be achieved to maintain current tariffs, including 10% for all goods and 25% for steel/aluminum and cars.
“But we are still looking for the USA to raise critical goods (including pharmaceutical) a tariff of 25% that would increase the effective US tariff rate for the EU to 16 pages.”
Banks’ analysts with headquarters with headquarters are agreed.
As Chief Investment Officer from UBS, Mark Haefele wrote in a note that was shared with Assets This morning: “If the administration would implement the tariffs mentioned above on August 1st and let them on these levels, the probability of a US profit and the economic recession would increase.
“We therefore believe that the administration uses this latest round of the tariff calculation to maximize its negotiation and that it will ultimately duck, especially if there is a new attack by increased binding and volatility of the stock markets.”
