The United States has announced new tariffs aimed at several Asian economies, with President Donald Trump’s decisions exceeding expectations for most affected nations. Though we have been waiting, the announcement is sure to bring big changes. Singapore, India and the Philippines are in an equally interesting situation. They stand to benefit from tariff concessions in TPP, assuming the talks are successful.
Even worse, the newly announced tariffs are much higher than expected, sending shockwaves through the investor community. President Trump’s trade policies have injected a huge dose of uncertainty. Everyone from farmers to retailers to manufacturers is anxious as the global economy gets ready to absorb these tariffs. The implications of all this have already begun to squeeze the U.S. dollar, contributing to its free fall against other currencies.
Investor sentiment is increasingly cautious as the U.S. dollar continues to have a challenging outlook given continued protective tariff headwinds and the overall unfavorable economic climate. The GBP/USD, despite its decline yesterday and today, is holding strong—trading still well above 1.3600. At the same time, the EUR/USD remains above 1.1700 in European trading hours. The dollar is weakening, and that’s pushing gold higher. Today, for the second day in a row, gold is getting an orderly advance underway as trade tensions escalate.
President Trump’s recent round of tariffs is all the rage globally. For many Asian economies, these new tariffs come as a shock and analysts have started to weigh in. In addition, for the vast majority of countries, there will be higher effective tariff rates on transshipments. This action is likely to make lasting changes in trade patterns throughout the entire region.
Curiously, though, Singapore, India, and the Philippines never appeared in this recent flurry of announcements. These countries have the most to gain from tariff concessions if negotiations advance positively. Each of these possible benefits would radically alter the nature of competition within Asia. This, in turn, would make these countries more attractive to foreign direct investment and trade relationships.
The global economy is catching up with these changes. Consequently, it’s all eyes on central bank meetings ahead, and a largely stalemated U.S. economic data slate that may provide fresh clues to evolving market sentiment. This uncertainty about U.S. tariffs remains one of the biggest drags on economic predictions and investor sentiment.
The effects of these tariffs go far beyond trade balances, and they have a clearly harmful effect on the world economy. Investor should be careful in this stormy landscape. As noted by financial experts, “Information on these pages contains forward-looking statements that involve risks and uncertainties,” reminding stakeholders of the inherent volatility in markets.
In light of the rapidly changing landscape, this will be a vital time for investors to conduct rigorous due diligence and diligence standards. “You should do your own thorough research before making any investment decisions,” emphasizes a statement from FXStreet and the author.