Trump Talks a Great Deal
All in a day’s work, the leader of the free world bombarded China with billions in extra tariffs, teased a deal of epic proportions with Britain, and almost declared a national emergency. What a time to be alive!
Investors are still taking stock of the weekend’s events, which saw President Trump put on a thrilling show for the global economy. Fundamentally, a connected world is better than an isolated world, where countries hide behind trade barriers. It may be competitive, and there may be winners and losers, but markets know that if goods made anywhere can be sold anywhere, we’ll all come out better off!
On that account, some believe the US President just took us one step forward, two steps backward. Right now, he’s attending a who’s who summit in France of the world’s biggest economic powerhouses, called the G-7. He’s spent most of his time there defending big-time tariff hikes against China. Dubbing President Xi as the “enemy,” Trump’s raised the stakes from 25% to 30% on around half of Chinese goods, and from 10% to 15% on the rest. We await the “enemy’s” retaliation!
The President is evening out the headlines, however, also using the summit to wax lyrical about a “very big trade deal” with the UK. Eventually, Britain will leave the European Union for a life of self-employment, going it alone to drum up brand new trade deals. Trump and Johnson appear to have really hit it off, but will either still be in charge by trade deal time?
What we do know is that amid all of this, the world’s central banks are desperately trying to keep the markets upright. In the US, pressure on Federal Reserve Chair Jerome Powell has been building to administer more economic painkillers to investors. The problem is; monetary medicine is hard, if not impossible, to take back!