Tariffs don’t scare investors, but maybe they should
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The most dangerous of tariffs is how clear they are sounding. What can be clear than charging 25 percent of Canada and Mexico products. However, the influence and implementation of such events are devastated. It can explain the muted market response.
Some shares followed the predictable scenario on Monday after the tariffs were announced. For example, the shares of Carmakers fell. It makes sense. Their vehicles contain the parts that cross the boundaries, in some cases several times before the dealership reached. Stellantis is one company that delivers between fixtures on both sides of the US-Canadian border.
Then there are companies that are now buying goods from China and sell them to US consumers. This will include the best purchase of electronics or budget output dollar. Now they face the disagreement between the decision to swallow the cost of the cost and how much the inventors of the President to consumers Donald TrumpA number
Wider, further anxiety is waiting for corporate America. Trump tariffs have just made the already strong dollar higher. It’s not a surprise in itself. Study of Trump Last Presidency suggested that the tariffs on China raise the dollarand pushed Renmin. Citigroup strategists count the last tariffs justify 3%.
It is dragging for companies. From Internet search suppliers to coffee chains that receive most of their income and earnings in foreign currency. It was as if Trump slapped his foreign earnings.
Technology, food and household products are most affected, Morgan Stanley strategists are calculated. The least telecommunications and utilities. Wall Street Bank also found that low sensitivity shares to the dollar set their peers from September.
All this helps adjustment than crisis. 1% fall in the S & P 500 index until late in the morning. After Mexico, the one-month return was received. Does not even be converted last year in 20 worst trading days. Perhaps the worst has already been a price, as Trump did not secure any secrets about his plans. BNP Paribas Economyists notes that tariffs are already in the initial economic forecasts.
But it can be equally that investors don’t know where to start. Supplier networks are different even between close peer companies. Commercial war, especially when the cause of the supply chains is recovering from the epidemic is the unheard area. One of the most important features of the American exclusive rule is that investors collect US assets during chaos, even when Uncle Sam is the cause of that disorder.
In any case, the market response is mainly no more than the bush itself is a risk. Did the price prices fall? As there is, the relative inactivity of investors makes it a little reason to show him sharply.
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