President Donald Trump’s decision to introduce tariffs on steel and aluminium imports to the United States has caused a chain reaction across the US economy. Traders are worried that the tariffs could bring an end to the economic growth that the US and much of the rest of the world has enjoyed over the last few years and create a tit for tat trade war that could severely damage most major economies. The impacts could be many and varied. In this article, we’ll take a look at what they could be.
A boost for US manufacturers?
Trump and many of his advisers favour tariffs as they believe they will protect US industries that have come under significant pressure from foreign competition. However, some economists fear that Trump will set off a wave of reprisal tariffs that will eventually damage the steel and aluminium industries in all countries. They point out that the general liberalisation of trade over the last 30 or so years has gone hand in hand with an economic boom that has lifted millions out of poverty and improved the living standards of the vast majority of the world’s population.
An exit from stocks and shares
Wall Street has reacted negatively to the news of potential tariffs. Stock markets, which seemed to be recovering well from a roller coaster couple of weeks, took a dive when the news first broke and have reacted even more negatively as more details have emerged. If tariff related concerns continue to put stocks under pressure, then it is likely that more investors will look to shift their portfolios towards alternative investments such as government bonds or crypto currencies.
The tariff saga is definitely one that all investors should be wise to and take into account as they make decisions over the coming weeks and months.
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