Trump wants to upend the entire global order. Can he stomach the price tag?
The global share markets were swept away by over $ 2 trillion dollars on Thursday while investors reacted to the new large rates of Donald Trump. The markets were caught abroad from how strong the rates were from how strong were.
“The markets have voted-this is obviously an evil for the growth of us and in the world,” wrote Derek Holt, vice-president and head of the economy of the capital markets in Scotiabank.
The Sell-off highlights a key demand in the heart of Trump’s commercial policy, which announced on Wednesday. The United States are putting a minimum rate of 10 % on almost all countries, with some nations that receive a so -called “mutual” sample more called, such as China, 34 %, the European Union at 20 % and Vietnam at 46 %.
On the one hand, the President of the United States wants to overthrow 70 years of global commerce and basically change the way the world does business. But it is also distributing exemptions intended to protect American companies, as for the automotive industry and Taiwanese semiconductors.
A message incorporated into the market market: Trump cannot have it in both ways.
Trump has announced large “mutual” rates on dozen countries. Who was hit – and was not hit? Therefore, Trump says that Canada has torn the United States, imposing steep rates to imported American lactie -lactiero products. Is it right?
“Even the United States cannot have its cake and eat it,” says Karl Schamotta, the market strategist at the Corpay financial service company.
Schamotta says that the United States have built the global commercial system in the last 70 years and has been its main beneficiary.
“If you overturn that world order, you will pay the cost,” he says.
“The question is if [Trump] will have the stomach to stay with it and resist the political pressure and the negative consequences that will come with [this policy]. “
The car manufacturers pause production
Share markets are not the only ones to show signs of pain.
Hours after the tariff announcement, Stellantis, owner of the Jeep and Ram brands, break in some plants in Canada and Mexico. This was widely expected, since the 25 % Trump vehicle rate rate rate rate rate rate would apply any non -American part Used in vehicles made outside the United States
The Stellantis car manufacturer has confirmed that it is closing its assembly system in Windsor, Ontario, for two weeks, largely due to the US rates on imported vehicles. Unifor Local 444 estimates about 4,500 people work in various jobs and commercials in the factory.
But closing the production in those plants will have a chain effect on American production. For Stellantide, the break will have an impact on some of its US propulsion and stamping systems that support these factories, he said.
This will lead to the layoffs of American workers.
The break has an impact of about 3,200 people in Canada and about 900 in the United States, Stellantis declared in a statement to CBC News.
Canada is avenged the commercial policy of the President of the United States Donald Trump with a 25 % rate on the vehicles imported from the United States that do not comply with the Canada-USSICAL agreement. Prime Minister Mark Carney said that Trump’s tariff plan means that the global economy “is basically different today than yesterday”.
Therefore, investors are losing the shirts. American workers are fired and the rates have not yet been fully imposed. In the meantime, Canada has implemented a corresponding rate of 25 % On US manufacturing vehicles.
The senior economist of the Salgi BMO healing that we have no way of knowing how much things will worsen.
“The big question is now: how aggressively the other countries are avenged and the president will then follow with threatened countermeasures, drastically increasing the commercial war and increasing the risk of a global and American recession?”? He wrote Guattieri.
Fabrics, food more exposed to rates
Rates are a tax for American companies. The Budget Laboratory at Yale University I creaked the numbers and found Wednesday’s announcement prompted the average actual tariff rate in the United States to 22.5 percent, the highest since 1909.
The director of the Economy of the Budget Laboratory, German Ernie, states that the new rates will increase prices by 1.3 percent. This means that the purchasing power of each family will fall on average $ 2,100 per year in 2024 dollars, he, he He wrote in a post on social media. All the rates of this year will increase the prices of 2.3 percent, he said, for an average loss of $ 3,800.
TRA NHU Tung, president of a THANH Cong’s textile investment group, states that the tariff impact of the United States could mean more business for countries such as Canada to compensate for lost American orders.
The budget workshop has found that the products most exposed to Trump taxes to date are fabrics and clothing. He says that prices for fabrics will increase up to 17 % when all the rates announced so far are completely implemented.
Even the food will be affected disproportionately, increasing by 2.8 percent by all samples.
This by a president who was largely elected by the voters who were worried about the increase in the cost of living.
The secretary of the Trump trade, Howard Lutnick, made the rounds of financial news channels while the markets sold Thursday. Bloomberg surveillance The conductor Jonathan Ferro asked the question that obscures the entire commercial policy: “How pain are you willing to tolerate? How much are market pain willing to tolerate?”
Lutnick, a successful investment magnate that is a longtime friend of the president, had to face criticisms as one of the voices in the administration that pushes for higher and more difficult rates, regardless of the cost.
Support or frustration for the rates of the President of the United States Donald Trump on Canada have divided politicians along the party lines and left consumers captured in the middle.
“What will happen is that people will realize that it is the great American economy that is the winner here. And anyone who doubts and anyone who shorts Donald Trump, or anyone who doubts the strength and power of the American economy, is making a foolish bet,” Lutnick said.
However, he continued to say that these rates will mean difficulties for anyone who purchases much of anything done outside the United States
“Of course, importers will have difficulty understanding what to do because they went and have found the cheapest production in the world. It is time to bring home that production.”
In other words, he wants American companies to produce things that use low -cost work to repatriate that production in the United States, where they would have had to pay more to employees. Which would increase the price for American consumers.
The question in the weeks and months is if the administration will stick to its guns and push for that repatriation, regardless of the price it will pay as consumers continue to see the tank of actions and prices increase.
