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The most dangerous thing for tariffs is how simple they sound. Is it easier to levy 25 % of all products in Canada and Mexico? However, the impact and implementation of such trade measures have become very complicated. This may explain the mute response of the market.
After announcing tariffs, some stocks follow predictable scripts. For example, the stock price of automakers has fallen. This makes sense: their vehicles include parts that crossed the border many times before arriving at the dealer. Stellandis is a company that can transport kit between facilities on both sides of the Canadian border.
Then, some companies purchase their current products from China and sell them to American consumers. This will include electronic retailers Best buying or budget exports. Now, they are facing the cute decisions between the number of swallowing costs and the amount of consumers-may cause the anger of President Donald Trump.
For American companies, it is widespread for discomfort. Trump’s tariffs have improved the strong dollar. This is not surprising. A study of the last presidential position of Trump showed that the tariffs on China have pushed up the US dollar and pushed off the RMB. Citi Group strategists believe that the latest tariffs prove that 3 % bumps are reasonable.
This is an obstacle for the company (from the Internet search provider to the coffee chain), and these companies have received a lot of revenue and income in foreign currencies. It seems that Trump tariffs on their overseas income.
Morgan Stanley strategists believe that technology, food and family supplies are the most affected and most affected; telecommunications and public are the least. Wall Street Bank also found that since September, stocks sensitive to the US dollar income are better than their peers.
All of this indicates that adjustments are not crisis. After a month of probation in Mexico, in the evening, 1 % of the S & P 500 index fell into the S & P 500 Index, and did not even make it enter the worst trading day of the 20s in the past year. Since Trump has no secret plan, the worst case may have been priced. The Economist of the Bank of Paris (BNP Paribas) pointed out that tariffs have been included in the baseline economic forecast.
But this may also be that investors don’t know where to start. Supply chain stores are different even between companies with intimate peers. A trade war, especially when the supply chain recovered from the popularity chain is an unknown territory. One of the lasting characteristics of American overallism is that even if Uncle Sam is the cause of this chaos, investors flood to US assets during the chaotic period.
In any way, the market’s response (basically no more than shrugging shoulders) is a risk in itself. When the stock price fell, it sent a message to the president, that is, slaping the tariff is not as simple as it sounded. In fact, the relative action of investors has almost no reason to show restraint.
john.foley@ft.com
