The markets remain on tenterhooks ahead of today's long-awaited announcement of Donald Trump's reciprocal tariffs. This decision could heighten concerns about growth, both in the United States and at world level.
Risk assets were down again on Monday in the run-up to what Trump has dubbed Liberation Day on 2 April, when he is due to announce a raft of reciprocal customs tariffs, which would see the trade war take on a global dimension.
Hopes and fears surrounding US tariffs continue to keep the market on its toes. Yesterday, the hope that the next wave of US tariffs would finally be more limited and targeted, combined with a very solid US services ISM report, fuelled a rebound by US risk assets (led by US techs) and the US dollar, and pushed US bond yields higher in a pro-growth configuration.
After the very fragile post-FOMC rebound, Friday's session saw American indices (notably techs) extend their recovery, aided by more measured remarks from Donald Trump, who said “there’ll be flexibility” on reciprocal tariffs.
Friday's session was marked by the announcement that an agreement has been reached with the Greens in Germany, notably on the €500bn infrastructure fund, of which €100bn will be dedicated to the energy transition, but also on exemptions to the debt brake.
The 25% tariffs on steel and aluminium announced by Donald Trump in February came into force on Wednesday. They affect a number of countries, but in particular Canada, Brazil, Mexico, Germany and several Asian countries.
The markets do not really seem to share Donald Trump's indifference to the short-term impact of his policies on the US economy.
American exceptionalism, the main market theme since Trump's election in November, is clearly in a bad way, stoking the idea that American soft power is on the wane. Trump is certainly not solely to blame for this gradual deterioration. Rather, it is the promise of a rebound that seems to be vanishing.
