It is looking increasingly likely the Trump administration has entered the White House with a detailed economic game plan. Some of this was signalled on the campaign trail last year, but was largely disregarded by the market. Team Trump this time around sounds more like a corporation than a national government, and is negotiating like one.
The current round of tariff announcements is increasingly being viewed as the opening gambit in a new series of trade negotiations with America's main trading partners, as Trump looks to address some of the issues that the US economy is still grappling with. It may upset some of America's closest allies, but his intention seems to be, as it says on the hats, to make America great again.
This is not business as usual
While markets are looking a little calmer on Wednesday, "the proverbial tariff can has just been kicked down the road," according to one analyst we spoke to this morning. Trump's proposed tariffs on Canada and Mexico, while postponed ahead of talks, are still on the table. There is also a full review of US trade policy which the President has ordered and which is due to report back in April.
The problem for US stocks is that not only US tariffs but the response of trading partners could harm big American businesses, which have grown up relying on a relatively benign international trading environment in the last 25 years. These are companies that rely on access to foreign markets, but those markets could be about to get a lot more expensive to sell into. Don't forget a punchy one third of the revenues for S&P 500 companies come from foreign sources.
Want the full story? Access all of The Armchair Trader's content for just £5.99 per month.
Get weekly investment ideas and tips that will take your investing to the next level. Sign up here.
Free 28 day trial. Cancel anytime.
Log In or Sign Up to Armchair Trader+Already a member? Log in here:
Not a member? Sign up now or see the membership benefits
Further content of this article is not available as it is for members only. Please visit the registration page for Armchair Trader Plus+ for further details on the benefits of becoming a member.