The News
Global markets were rocked by volatility Wednesday as the world awaited details on US President Donald Trump’s sweeping tariff plan, which he plans to unveil this afternoon.
Beyond White House confirmation that the duties will go into effect immediately after they’re announced, little is known about their scope — including what nations and goods will be targeted.
US investors are on edge, companies are rethinking investments, and world governments are girding for a punishing trade war.
SIGNALS
How countries are preparing to respond to Trump’s tariffs
US allies and adversaries alike are preparing to respond to the tariffs, with reactions ranging from carrots to sticks. The European Union is preparing emergency measures to support parts of its own economy and mulling going after Big Tech and US banks — a potentially huge escalation. Canada has vowed retaliation, and could target American car imports, a step it has avoided taking so far in the trade conflict with Washington. Trump is unlikely to give Japan the exemptions it has requested, but the country could extract concessions using the leverage it has over Washington, The Japan Times wrote, including the unusual step of limiting Japanese car exports to the US, or simply importing more from the US to reduce the trade deficit.
Some investors are looking forward to tariff clarity
US stocks, which for weeks have tumbled over recession fears sparked by Trump’s whiplash tariff approach, have ticked up in the days leading up to “Liberation Day,” because some investors are betting that any clarity whatsoever will bring stability to markets, The Wall Street Journal reported. There is also “continued confidence that Trump won’t stick with any tariff policy that would cause a serious drag on growth.” Executives aren’t as sure: “The shift in trade policy is also by far-and-away Trump’s least popular move among businesses, with a sizeable share of CFOs now saying changes in tariffs have caused them to cut their hiring and investment plans,” economic analyst Joseph Politano wrote in his newsletter.
Asia’s export-heavy manufacturing sector braces for impact
Asia’s manufacturing sector is bracing for upheaval from the flood of new tariffs. The continent has long benefited from a growth model centered around “exports to the US and a world of low trade barriers,” Bloomberg wrote. But factory activity slowed last month in several countries, including Japan and South Korea, as signs of risk bubbled up. Companies are now playing a global game of “catch-me-if-you-can,” a supply chain expert told The Los Angeles Times: Trump’s 2018 tariffs on China pushed firms to relocate to other Asian countries, but with more nations now in the line of fire, corporations are hunting for places spared by Washington — the Middle East has “become very hot at the moment.”