Connect with us

Hi, what are you looking for?

Alive Business PlanAlive Business Plan

Investing

What could Trump 2.0 mean for global trade?

Investing.com — A second Trump administration could bring significant shifts to global trade policy, signaling a return to the assertive and transactional approach seen during Donald Trump’s first term.

According to UBS strategists, this could manifest through aggressive tariff measures targeting countries with substantial trade deficits with the US, particularly China. The policy focus is likely to extend to sectors considered critical to national security and economic interests.

UBS identifies three potential tariff scenarios under a second Trump presidency. The first involves universal tariffs, which carry a 25% probability. This scenario envisions blanket tariffs on all US imports, such as a proposed 60% on Chinese goods and 10-20% on other countries.

While such measures could generate revenue to offset tax cuts via Congressional reconciliation, UBS notes the political and logistical challenges. A universal tariff approach would harm both the US and global economies more severely and could spark widespread retaliation, leading to an escalating trade war.

“In our view, President Trump would prefer to go the congressional route to achieve universal tariffs, although he has not yet publicly endorsed the idea. However, we believe that Congress will be unwilling to go along with it,” UBS strategists said.

“If Congress is unwilling to impose universal tariffs, the Trump administration can try to implement them using executive authority. However, there is no precedent for this, and it remains to be seen whether such a move would hold up against legal challenges,” they added.

Selective tariffs, with a 65% probability, are considered the most likely scenario. These would target specific goods or sectors using executive authority under existing trade laws.

UBS expects this approach would likely revisit the 2020 Phase 1 trade deal with China while addressing contentious issues with the EU and Mexico.

The bank highlights three factors that could soften the blow of selective tariffs on Asia, including China’s fiscal and monetary policies, stronger intra-regional trade, and rising US market share in the region.

The third scenario, a brokered deal to avoid tariffs altogether, is seen as unlikely, with just a 10% probability.

UBS points out that tariffs under Trump 2.0 would also have inflationary implications. Universal tariffs are expected to cause short-term price spikes, with UBS estimating a 10% tariff on all imports raising US price levels by up to 1.7% if corporate profit-led inflation amplifies the effects.

Selective tariffs, on the other hand, could have a more limited impact on inflation and economic activity.

These targeted measures would primarily focus on specific goods or sectors, allowing for trade rerouting to minimize disruptions.

“While bilateral trade between the US and partner countries may decline because of the tariffs, actual rebalancing of international trade or reshoring of economic activity back to the US would likely be negligible,” UBS’s report states.

This post appeared first on investing.com
Become a VIP member by signing up for our newsletter. Enjoy exclusive content, early access to sales, and special offers just for you! As a VIP, you'll receive personalized updates, loyalty rewards, and invitations to private events. Elevate your experience and join our exclusive community today!

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    You May Also Like

    Latest News

    The Gateway Pundit, a far-right website, published a note from its editor on Saturday acknowledging that two election workers in Georgia did not engage...

    Latest News

    New majorities in Congress, particularly when the incoming party has a new leader, offer the rare chance for the institution to take a breath...

    Latest News

    Sister Stephanie Schmidt had a hunch about what her fellow nuns would discuss over dinner at their Erie, Pennsylvania, monastery on Wednesday night. The...

    Investing

    JAKARTA (Reuters) -Indonesia has asked Alphabet (NASDAQ:GOOGL)’s Google and Apple (NASDAQ:AAPL) to block Chinese fast fashion e-commerce firm Temu in their application stores in...



    Disclaimer: alivebusinessplan.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 alivebusinessplan.com