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The most dangerous of tariffs is how easy it sounds. What could be clearer than hit 25 percent taxes on all goods from Canada and Mexico? However, the effects and the implementation of such trade measures are complicated. This could explain the steamed reaction of the market.
Some shares followed a predictable script on Monday after the tariffs were announced. For example, the shares of the automobile manufacturers fell. This makes sense: your vehicles include parts that in some cases cross borders several times before reaching the dealer. Stellantis is a company that takes care of KIT between the facilities on both sides of the US border.
Then there are companies that now buy more expensive goods from China and sell to US consumers. This includes the electronics retailer Best Buy or Budget Outlet Dollar Tree. You are now the non -enviable decision between how much of these increased costs can be swallowed and how much you pass on to consumers – at the risk of capturing the president’s anger Donald Trump.
Further complaints await you for the company of America. Trump’s tariffs have pounded the already strong dollar even higher. This is not a surprise in itself. A study on Trump’s last presidency suggested that tariffs in China increase the dollarAnd pushed the Renminbi down. Citigroup strategists assume that the latest tariffs justify a 3 percent bump.
This is a drag for companies -from Internet search providers to coffee chains -that receive a large proportion of their income and income in foreign currencies. It is as if Trump had a tariff overseas.
Technology, food and household goods are the most affected, the strategists of Morgan Stanley, the consideration of the strategists; Telecommunications and supply companies least. Wall Street Bank also found that shares with less sensitivity to dollars have exceeded its colleagues since September.
All of this receives an adaptation rather than a crisis. The 1 percent fall in the S&P 500 does not even make it into the 20 worst trading days last year. Perhaps the worst has already been rated because Trump has not made a secret of his plans.
Both Canada and Mexico received a one -month postponement on Monday, after their leaders approved the concessions, including 10,000 employees to their limits at the United States. Nevertheless, the BNP -Paribas economists find that tariffs are already taken into account in economic forecasts of the baseline.
However, it can be equally that investors do not know where to start. The supply chains even differ between companies that are close colleagues. A trade war, especially when it still recovered from a pandemic, is an unknown area. One of the permanent characteristics of the American exception is that investors flow into US assets in times of chaos, even if Uncle Sam is the cause of this disorder.
In any case, the reaction of the market – basically nothing more than a shrug – is a risk itself. If the share prices had dropped, she would have sent the president a message that tapping on tariffs is not as easy as it sounds. As it is, the relative inactivity of investors gives him little reason to show reluctance.
