Washington – On Monday, the shares largely recovered from an early fall after President Trump confirmed that he would impose tariffs on Mexico for a month. But other massive tariffs, which were announced in Canada and China this weekend, stayed in the game because they are supposed to come into force at midnight on Tuesday.
The Dow Jones Industrial Average opened around 500 points according to the Japan's stock markets in Asia. European shares were also traded lower. After Mexico announced that it had made a contract with Trump to postpone the tariffs, the shares regained a large part of the loss after Mexico announced.
Even before the announcement of Mexico, the financial markets did not panic, which indicates that many may still endure hope that Trump could withdraw or delay his planned tariffs – 25% in Canada and Mexico and 10% for Chinese. Most economists say that the tariffs would probably suppress economic growth, lead to higher prices and violate jobs.
Canada announced retaliation tariffs in the United States on Sunday and aimed at agricultural goods and other products in Republican countries in order to achieve maximum political effects. Mexico and China also said that they were preparing countermeasures.
“Some in the markets hope that the tariffs are hard -to -face and that Trump could return at the last minute, since negotiations with Canada and Mexico have not yet been completed,” said Christopher Rupkey, chief economist at FWDBonds in New York. “Hold the markets and investors hold their breath. The next 24 hours could prove to be critical. “
It is clear whether Trump only uses the collective bargaining as a lever or intends to actually use it that the United States and its trading partners enter into extreme uncertainty.
If the tariffs and countermeasures become effective, there will probably be chaos at the limits, since many companies and government agencies do not seem to be prepared for the sudden imposition of the new rules. When a trade war comes, it will undoubtedly be expensive for all sides, at least in the immediate future and probably also longer, since US US trade in Mexico, Canada and China about 1.4 trillion dollars for practically every product involved under the sun.
Canada and Mexico are more susceptible because they depend heavily on exports to the USA, but the three North American economies are deeply integrated, especially when it comes to car production and trade in agricultural goods. Analysts say that US consumers will see higher prices in grocery stores within days, and since the inventory of cars and other consumer goods are exhausted, companies are expected to pass on the higher costs to consumers.
Mexico delivers many products to the Americans and the USA import billions of dollars of crude oil from Canada.
In addition to considerable disorders of the supply chains, jobs from trading partners will harm American exporters. While the US exports of things such as alcohol and soybeans will achieve the Red State economies, California will feel the pain in the slower sale of auto parts and electronics, and the seaports and logistics industries become the state on and down Chinese programs.