How are global markets reacting to President Trump's tariffs?

CGTN Europe

CGTN Europe interviewed Marc Ostwald, Chief Economist & Global Strategist, ADM ISI

Transcript

00:00President Trump says any country that buys oil or gas from Venezuela will pay

00:05an additional 25% tariff on all trade with the United States. This so-called

00:10secondary tariff will take effect on the 2nd of April which Trump has described

00:14as Liberation Day. US stock markets are sharply higher on Monday but investors

00:19are still cautious before that tariff deadline next week. Well let's talk to

00:24Mark Oswald who's Chief Economist and Global Strategist at ADM Investor

00:27Services International. Good to see you back on the program Mark. So what do you

00:30make of this latest move on tariffs and President Trump? What's he hoping to

00:34achieve? It is basically putting maximum pressure on countries like Venezuela and

00:44Iran to basically try and basically make the life very uncomfortable for

00:54both regimes. It's another example of how trade tariffs are being used for

01:01purposes which are actually not really that much related to trade but more to

01:07geopolitical and other issues. It seems that something new comes out on tariffs

01:13and President Trump almost every day. He's again talked about this 2nd of

01:16April deadline, Liberation Day as he calls it. What's Wall Street making of

01:21all this? Well there is definitely some relief that it is going to be primarily

01:29reciprocal tariffs. It's going to be quite targeted rather than wholesale. So

01:35the worst fears that have been there are not for the time being, one should stress,

01:42being realized and that has provided some relief. I think there's also been,

01:48one has to be a little bit careful with a lot of the moves that we've seen in equity

01:52markets over the past month because some of it is, it's been reaction to tariffs but it's

02:00prompted rotation trades within the equity market above all out of the US into Europe

02:06on the back of the German government's moves to take infrastructure spending and

02:13defence spending out of the government debt break rule. But you get these rapid

02:20swings from one part of the market to another whether it's intra-sector or

02:28intra-continent or intra-country and then it's basically very sharp moves of the

02:35pendulum and you find a lot of people now today basically looking at the valuations

02:41in the tech sector in the US and saying they're too cheap and in Europe basically looking at

02:46Germany saying well all well and good but there are a lot of other constraints like

02:51German planning, like labour skills and production capacity which will present

03:00challenges to their plans and so you suddenly get a swing back in the pendulum in the opposite

03:06direction. So as you point out lots going on over and above tariffs. We have had this

03:10word flexibility come out in recent days so haven't we in connection with those. You

03:15talked about US markets, you talked a bit about European markets, what about Asian markets?

03:19How are they responding to what's going on? The Asian markets this morning were not really

03:27quite as enthused as the US markets. I think in part it's because within certain parts

03:36of the Asian markets there are countries, particularly the fragile five group which

03:43includes in Asia, India and Indonesia which run fairly large budget deficits and have

03:50substantial trade deficits and there is concern that in a heightened trade tension environment

03:58that they will suffer because a lot of their economies basically depend on exports. So

04:04yes, I think Asia at the moment is basically, it's benefited certainly from some of the

04:15swing away but it's now really waiting to see what exactly is going to, there's a lot

04:22of promise from China in terms of doing things but will that actually turn into increased

04:29trade or within Asia which should remain less vulnerable in theory because it's been

04:37growing for quite some time to all the tariff wars or will the vulnerabilities in terms

04:44of the exports that they have to the US, particularly in countries like Vietnam, actually create

04:55a lot of headwinds for trade. So it's a very finely balanced situation and I think really

05:02that's why Asian markets to some extent are taking stock. It is also, I should stress,

05:08not a unitary picture across Asia, it's really quite divergent at the moment.

05:12Well Mark, good to talk to you as always. Thank you for coming back on the programme.

05:15Mark Osford from ADM Investor Services International.

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