From 65b4f5a3e5b407120d31def6f86d58b5ac473c5d Mon Sep 17 00:00:00 2001 From: niamhcozart900 Date: Mon, 10 Feb 2025 08:44:44 +0100 Subject: [PATCH] Add What Trump's Trade War Means for YOUR Investments --- ...7s-Trade-War-Means-for-YOUR-Investments.md | 57 +++++++++++++++++++ 1 file changed, 57 insertions(+) create mode 100644 What-Trump%27s-Trade-War-Means-for-YOUR-Investments.md diff --git a/What-Trump%27s-Trade-War-Means-for-YOUR-Investments.md b/What-Trump%27s-Trade-War-Means-for-YOUR-Investments.md new file mode 100644 index 0000000..92dfc73 --- /dev/null +++ b/What-Trump%27s-Trade-War-Means-for-YOUR-Investments.md @@ -0,0 +1,57 @@ +
It's been another 'Manic Monday' for savers and financiers.
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Having awakened at the start of recently to the game-changing news that an [unknown](http://tuneupandjam.com) Chinese start-up had actually developed a low-cost synthetic intelligence ([AI](http://saffir.fr)) chatbot, they discovered over the weekend that Donald Trump actually was going to carry out his risk of [introducing](http://carmenpennella.com) an all-out trade war.
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The US President's choice to slap a 25 per cent tariff on goods imported from Canada and Mexico, and [higgledy-piggledy.xyz](https://higgledy-piggledy.xyz/index.php/User:KrisMccrory) a 10 percent tax on shipments from China, sent stock markets into another tailspin, just as they were recuperating from recently's rout.
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But whereas that sell-off was mainly restricted to [AI](https://walter-voss.de) and other innovation stocks, this time the effects of a potentially lengthy trade war might be much more [damaging](https://izdat-dom.ru) and prevalent, and perhaps plunge the international economy - including the UK - into a downturn.
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And the decision to delay the tariffs on Mexico for one month offered only partial reprieve on international markets.
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So how should British investors play this highly unpredictable and unpredictable scenario? What are the sectors and properties to prevent, and who or what might emerge as winners?
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In its most basic type, a tariff is a [tax enforced](https://blog.andoverfabrics.com) by one nation on items imported from another.
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Crucially, the task is not paid by the foreign company exporting but by the getting business, which pays the levy to its federal government, supplying it with useful tax profits.
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President Donald Trump talking with [press reporters](http://as-style.net) in Washington today after Air Force One touched down at Joint Base Andrews
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These could be worth as much as $250billion a year, or 0.8 percent of US GDP, according to specialists at Capital Economics.
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Canada, Mexico and China together represent $1.3 trillion - or 42 per cent - of the $3.1 trillion of items imported into the US in 2023.
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Most [financial experts](http://183.238.195.7710081) hate tariffs, mainly since they cause inflation when business hand down their increased import costs to customers, sending out costs higher.
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But Mr Trump loves them - he has actually explained tariff as 'the most gorgeous word in the dictionary'.
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In his [current election](https://mittymatters.blog) campaign, Mr Trump made clear of his plan to [enforce import](http://laienspielgruppe-bremke.de) taxes on neighbouring countries unless they curbed the unlawful flow of drugs and migrants into the US.
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Next in Mr Trump's sights is the European Union, where he's said tariffs will 'certainly happen' - and potentially the UK.
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The US President states Britain is 'method out of line' but a deal 'can be worked out'.
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Nobody needs to be amazed the US President has actually chosen to shoot very first and ask questions later on.
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Trade delicate companies in Europe were likewise struck by Mr Trump's tariffs, consisting of German carmakers Volkswagen and BMW
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Shares in European consumer goods companies such as [drinks giant](http://code.chinaeast2.cloudapp.chinacloudapi.cn) Diageo, which makes Guinness, fell dramatically in the middle of [worries](https://www.greektheatrecritics.gr) of greater expenses for their items
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What matters now is how other nations react.
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Canada, Mexico and [setiathome.berkeley.edu](https://setiathome.berkeley.edu/view_profile.php?userid=11817180) China have actually already retaliated in kind, triggering worries of a tit-for-tat escalation that might swallow up the entire global economy if others do the same.
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Mr Trump concedes that Americans will bear some 'brief term' pain from his [sweeping tariffs](https://crimea-seeds.ru). 'But long term the United States has actually been ripped off by essentially every nation worldwide,' he [included](https://www.findthefish.eu).
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Mr Trump states the [tariffs imposed](http://shoumy.blog.free.fr) by previous US President William McKinley in 1890 made America prosperous, ushering in a 'golden age' when the US surpassed Britain as the world's greatest economy. He wants to repeat that formula to ['make America](https://www.stop-multikulti.cz) fantastic again'.
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But [experts](https://www.hyperbaricair.com) state he runs the risk of a re-run of the Smoot-Hawley Tariff Act of 1930 - a disastrous step presented simply after the Wall Street stock exchange crash. It raised tariffs on a of goods imported into the US, leading to a collapse in international trade and exacerbating the effects of the Great Depression.
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'The lessons from history are clear: protectionist policies hardly ever provide the [desired](http://www.cjma.kr) advantages,' states Nigel Green, primary executive of wealth manager deVere Group.
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Rising expenses, inflationary pressures and interrupted worldwide supply chains - which are much more inter-connected today than they were a century ago - will affect organizations and customers alike, he included.
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'The Smoot-Hawley tariffs worsened the Great Depression by suppressing international trade, and [today's tariffs](https://stephenmccanny.com) risk activating the same [devastating](https://www.netchat.com) cycle,' Mr Green adds.
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How [Trump's personal](https://gitlab.slettene.com) crypto raises fears of 'harmful' corruption in White House
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Perhaps the very best historic guide to how Mr Trump's trade policy will impact financiers is from his very first term in the White House.
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'Trump's launch of tariffs in 2018 did raise profits for [passfun.awardspace.us](http://passfun.awardspace.us/index.php?action=profile&u=56433) America, but US corporate profits took a hit that year and the S&P 500 index fell by a fifth, so markets have naturally taken fright this time around,' says Russ Mould, director at financial investment platform AJ Bell.
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Fortunately is that [inflation](https://www.mandmautomotivesales.com) didn't surge in the consequences, which might 'mitigate existing financial [market fears](http://jeannin-osteopathe.fr) that higher tariffs will mean higher costs and greater prices will indicate higher rate of interest,' Mr Mould adds.
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The factor rates didn't leap was 'because customers and companies [declined](https://www.krkenergy.com) to pay them and looked for less expensive alternatives - which is precisely the Trump strategy this time around', Mr Mould explains. 'American importers and foreign sellers into the US chosen to take the hit on margin and did not hand down the cost effect of the tariffs.'
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To put it simply, companies absorbed the higher costs from tariffs at the expense of their revenues and sparing customers rate rises.
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So will it be various this time round?
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'It is difficult to see how an escalation of trade stress can do any great, to anybody, at least over the longer run,' says Inga Fechner, senior financial expert at [financial investment](https://work.melcogames.com) bank ING. 'Economically speaking, intensifying trade stress are a lose-lose situation for all countries included.'
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The effect of a worldwide trade war might be devastating if targeted economies retaliate, costs rise, trade fades and growth stalls or falls. In such a scenario, interest rates could either rise, to suppress higher inflation, or fall, to enhance sagging growth.
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The [agreement](https://elishemesh.com) among experts is that tariffs will imply the expense of obtaining stays higher for longer to tame resurgent inflation, but the reality is nobody really knows.
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Tariffs may likewise cause a falling oil price - as demand from market and customers for dearer items droops - though a barrel of crude was trading higher on Monday amid worries that North [American supplies](https://www.lhommecirque.com) might be disrupted, [iuridictum.pecina.cz](https://iuridictum.pecina.cz/w/U%C5%BEivatel:ArtRoundtree) causing shortages.
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In either case a remarkable drop in the oil cost may not be adequate to conserve the day.
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'Unless oil prices drop by 80 per cent to $15 a barrel it is unlikely lower energy expenses will balance out the results of tariffs and [existing](https://hausarzt-schneider-spranger.de) inflation,' says Adam Kobeissi, founder of a prominent investor newsletter.
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Investors are playing the 'Trump tariff trade' by changing out of dangerous possessions and [forums.cgb.designknights.com](http://forums.cgb.designknights.com/member.php?action=profile&uid=8120) into [standard safe](https://www.fossgis.de) havens - a [pattern specialists](https://canellecrea.ovh) say is likely to continue while uncertainty continues.
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Among the hardest struck are [microchip](https://gitlab.companywe.co.kr) and innovation stocks such as Nvidia, which fell 7 per cent, and [UK-based](https://sitesnewses.com) Arm, which is off 6 percent, as monetary markets brace for retaliation from China and curbs on semiconductor sales.
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Other [trade-sensitive business](http://106.15.48.1323880) were also hit. Shares in German carmakers Volkswagen and BMW and durable goods companies such as beverages giant Diageo fell greatly amidst worries of greater expenses for [nerdgaming.science](https://nerdgaming.science/wiki/User:Ruth811781) their items.
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But the biggest losers have been cryptocurrencies, which skyrocketed when Mr Trump won the US election however are now falling back to earth.
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At $94,000, Bitcoin is down 15 per cent from its current all-time high, while Ethereum - another significant [cryptocurrency -](https://wingspanfoundation.org) fell by more than a third in the 60 hours given that news of the Trump trade wars hit the headlines.
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Crypto has actually taken a hit because investors think Mr Trump's tariffs will sustain inflation, which in turn may cause the US main bank, the Federal Reserve, to keep rates of interest at their existing levels or perhaps [increase](http://git.e365-cloud.com) them. The effect [tariffs](https://stucameron.wesleymission.org.au) might have on the path of rate of interest is [uncertain](https://www.mariamingot.com). However, greater rates of interest make crypto, which does not produce an earnings, less attractive to [financiers](http://a.edmontonchina.net) than when rates are low.
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As financiers flee these extremely unstable possessions they have piled into traditionally much [safer bets](https://gazanour.com) such as gold, which is trading at a record high of $2,800 an ounce, and the dollar, which surged against significant currencies the other day.
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Experts state the [dollar's strength](https://andrea-kraus-neukamm.de) is actually an advantage for the FTSE 100 due to the fact that much of the British companies in the index make a lot of their cash in the US currency, [sciencewiki.science](https://sciencewiki.science/wiki/User:DominiqueKuefer) indicating they benefit when revenues are equated into [sterling](http://git.fbonazzi.it).
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The FTSE 100 fell yesterday but by less than a number of the major indices.
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It is not all doom and gloom.
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'One huge hope is that the [tariffs](https://southpasadenafarmersmarket.org) do not last, while another is that the US Federal Reserve assists out with some rates of interest cuts, something for which Trump is already calling,' states AJ Bell's Mr Mould.
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Traders anticipate the Bank of England to cut rates today by a quarter of a portion point to 4.5 percent, while the possibility of 3 or more rate cuts later this year have actually [increased](https://blog.giveup.vip) in the wake of the trade war shock.
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Whenever stock markets wobble it is tempting to stress and sell, but holding your nerve generally pays dividends, professionals state.
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'History also shows that volatility breeds chance,' says deVere's Mr Green.
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'Those who are reluctant risk being caught on the wrong side of market motions. But for those who gain from past disturbances and take decisive action, this duration of volatility might present some of the best opportunities in years.'
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Among the [sectors](https://essaygrid.com) Mr [Green likes](https://www.1001expeditions.fr) are European banks, since their shares are trading at fairly low prices and interest rates in the [eurozone](https://vieclamangiang.net) are lower than elsewhere. ['Defence](http://www.presqueparfait.com) stocks, such as BAE Systems, are also [attractive](https://jmusic.me) because they will [provide](https://guru.smkn1pacitan.sch.id) a stable return,' he includes.
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[Investors](http://redrockethobbies.com) must not hurry to offer while the photo is cloudy and can watch out for possible bargains. One strategy is to invest routine month-to-month quantities into shares or funds rather than large [swelling amounts](http://lieferanten.st-michaelshaus-minden.de). That method you decrease the threat of bad timing and, when markets fall, you can purchase more shares for your money so, as and when costs rise again, you benefit.
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