Daily Brief – Time to get a Thesaurus

Time to get a Thesaurus

Removing tariffs just as quickly as President Trump thought to impose them is surely removing any elegance associated with Trump’s ‘favourite word in the dictionary’. On second thoughts, there likely never was any. In the two weeks that have passed since the President’s inauguration the tariff story goes something like this. On 20^th Jan, the date of Trump’s inauguration, dozens of executive orders were signed. Tariffs are notably excluded allowing risk appetite and growth expectations to flourish. 

Such an environment has proved to be positive for equities but negative to the US Dollar and bond prices. On Friday reports began to emerge that the White House was seeking to enact the foreshadowed tariffs on the weekend. On Saturday that happened – 25% a piece for Canada and Mexico and 10% for China. The time such tariffs was due to come into effect was just a few hours ago, at 5:01 GMT. As of that time this morning, only goods imported from China face new tariffs. This follows reports yesterday afternoon that the tariffs due to be imposed on Canada and Mexico would be delayed by one month. 

There’s a lot to be read into these ‘concessions’, far too much in fact for this brief. In short, the market will be considering whether yesterday’s extension to the tariff impositions might evolve into a discontinuation of tariffs altogether. This is because the offers for which the tariffs were suspended – I.e posting (10,000) troops to respective borders and cracking down on the import of synthetic opioids into the United States – were already either in force or due to come into force. In other words, Trump appeared to be saying I’ll back down if you continue to do exactly what you’re already doing. Markets corrected following their gap lower with the Mexican Peso even recovering all ground lost to the Dollar over the weekend. 

Discussion and Analysis by Charles Porter

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