NEW YORK (Reuters) -President Donald Trump on Saturday ordered tariffs of 25% on Canadian and Mexican imports and 10% on Chinese goods starting on Tuesday to address what he calls a national emergency of fentanyl and illegal immigration pouring into the United States.
Mexico and Canada, the top two U.S. trading partners, immediately vowed retaliatory tariffs, while China said it would challenge Trump’s move at the World Trade Organization and take other “countermeasures”.
Here are some comments from strategists and investors:
HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG BANK, LONDON
“There was some hope that there would be a last-minute negotiation breakthrough with Canada, especially. So, I would say this is a modest disappointment for markets, especially for the Canadian currency.
“For Europe, this is a mild negative in the sense that (Canada’s) negotiations with Trump did not yield a last-minute result and the European response has been to negotiate.
“But still, we had this relief since Trump came to office that he isn’t starting big tariffs, that we (Europe) are apparently not his prime priority of that.
“And hence the overall narrative holds that we hope to avoid big disruptive tariffs by offering some concessions on a) more military spending at b) importing much more natural gas from the U.S.”
MARCHEL ALEXANDROVICH, ECONOMIST, SALTMARSH ECONOMICS, LONDON
“It’s only a matter of time before the EU is targeted. In the meantime, the fact that Canada is responding and putting up tariffs against U.S. goods is a sign of things to come and demonstrates the risks to global trade.
“Trade tensions are unquestionably a headwind to GDP growth, but higher inflation will give central banks a dilemma in terms of how to respond. So there is a lot of information there for the markets to process.
“But, stronger headwinds to growth mean that the ECB (European Central Bank) will likely face even more pressure to ease monetary conditions.”
NICK TWIDALE, CHIEF MARKET ANALYST, ATFX GLOBAL, SYDNEY
“I think we will see some gapping (on Monday) in the respective currencies. There was still some hope that there would be some form of reprieve, but that hasn’t eventuated so we will see markets react. It’s negative for CAD, MXN and CNH, as well as overall risk.
“Equities will open on the back foot in the Asian session, then we will be monitoring newswires hard again for further updates.”
NICK FERRES, CIO, VANTAGE POINT ASSET MANAGEMENT, SINGAPORE
“My sense is to fade any negative reaction at the open in Asia, especially since there is room for negotiation. The tariffs are probably not as bad as feared, especially on China.”
