What impact will Trump's tariff threats and policies have on SA's economy?
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GUEST - Sanisha Packirisamy, chief economist at Momentum Investments
Investor confidence is likely to remain rattled in the context of ongoing market volatility in response to US President Donald Trump’s policy announcements and tariff threats.
The US imposed a 25% tariff on imports from Canada and Mexico, alongside a 10% tariff on Chinese goods. Canadian energy products faced a reduced tariff of 10%. Although the tariffs on Canada and Mexico are on hold, these steps from Trump’s administration marks the initial step in what could possibly escalate into a broader global trade conflict, says Sanisha Packirisamy, chief economist at Momentum Investments.
Within the next few months, imports from the European Union are expected to be targeted, with the possibility for a universal tariff thereafter. Given that exports to the US constitute roughly a fifth of Canada’s and Mexico’s GDP, these tariffs could push both economies into recession later this year. Furthermore, the resulting inflation jump in the US is projected to be faster and more significant than anticipated, reducing the Federal Reserve's window for cutting interest rates further.
Investor confidence is likely to remain rattled in the context of ongoing market volatility in response to US President Donald Trump’s policy announcements and tariff threats.
The US imposed a 25% tariff on imports from Canada and Mexico, alongside a 10% tariff on Chinese goods. Canadian energy products faced a reduced tariff of 10%. Although the tariffs on Canada and Mexico are on hold, these steps from Trump’s administration marks the initial step in what could possibly escalate into a broader global trade conflict, says Sanisha Packirisamy, chief economist at Momentum Investments.
Within the next few months, imports from the European Union are expected to be targeted, with the possibility for a universal tariff thereafter. Given that exports to the US constitute roughly a fifth of Canada’s and Mexico’s GDP, these tariffs could push both economies into recession later this year. Furthermore, the resulting inflation jump in the US is projected to be faster and more significant than anticipated, reducing the Federal Reserve's window for cutting interest rates further.
