Global markets drop as Trump trade gambit dismantles friends and foes
The last week in global trade was, as we all sensed for some time, a rollercoaster and President Trump was in and out of control — albeit with some admin help.
The smoke-and-mirrors planned-brush-up of a beak or two into America’s hand in affairs beyond was getting, instead this once-in-until-more seemed bigger than we had even dispatched a tsunami. Under the unrelated headlines, what you see evens less of a strategy and then more of what appears to be a political brushfire with teeth in the real economy.
Tariffs for All, Even Friends
In a single stroke, the imported for 10% on ALL goods – no exemptions, no rules of origin. Even close allies like Australia and the UK are in it now.
A disconcerting pivot. The U.S. wasn’t always so clear about if it wanted to differentiate between rivals and long standing partners in previous epochs. Now everyone is in the same boat.
“Some nuance,” said one European trade diplomat. “But instead it strikes me like all of us are being prosecuted by a common agency.
Worse, medications–among the UK’s largest exports — are on our radar. And that’s a lot, especially for healthcare systems that rely on cross-border supply chains.
🗞 A Surprise New Tax
Buried in all the noise is a new logistics policy that could do much damage worldwide: A big port tax for all Chinese-made ships. Not the cargo just the ships.
With more than half of the world’s freighters built in China, it threatens to disrupt shipping lanes already under strain. If it does follow through on February 1, then the result could be delayed products and inflated prices, with supply chain discomfort spanning continents.
Businesses are not breathing easy despite the 90-day moratorium on tariffs. You cannot overnight reroute cargo or shift suppliers.
USA vs. China: Tensions Flare
It’s major power politics but at its heart a deepening standoff between Washington and Beijing. The two biggest economies in the world seem to be embarking on a kind of high-stakes game of chicken.
The factories in China can’t take all the heat — they are preparing to scale back a little. Layoffs are approaching. America shoppers may soon have more expensive day-to-day basics — even as the White House tries to discourage price hikes.
“Well you can’t tell us not to raise prices, tariffs are not free,” the CEO bluntly stated.
This is ironic since most of the countries involved in this scandal probably benefit from it. Other countries like Canada and Germany may all of a sudden see cheaper goods being purchased by China from their perspective.
💸 Trade War to Market Jitters
The effects have not stopped at the territory of goods and cargo. Investors got scared too, in the form of bond markets. U. S. Treasury yields rose to 5% mirroring that early pandemic panic back in March 2020.
Something? no one knows for certain. They suspect a quiet U.S. debt selling around Asia was in progress. China — the second-largest holder of U.S, ain’t confirmed nothing, but the signal to Washington sent loud and clear.
“Markets don’t like it when there’s ambiguity,” a Wall Street analyst said. “And all we have right now.
All Old Allies, New Dilemmas
What is the most surprising twist? Washington suddenly pivots back? Treasury Secretary Scott Bessent has already initiated efforts to rebuild trade bridges the Trump administration spent most of years burning.
Having labelled close allies just economic opportunists, U.S now needs their help to even balance China. But diplomacy does not reset that quick. Still we make each other out an enemy over fear, and there is very, very little of it out there.
🌀 Calm or a pause?
For the moment, things are quieter. The administration has put on hold, most likely trying to regroup. Yet the damage could have already been done. Everyone in investor/ business and foreign government wants to know:
“What’s the plan here?” Don’t be shocked by deals, partnership or long term faith as soon as they get an answer through the mud. It might feel like a lull — and maybe it is the eye of the storm.
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