After yesterday's sharp rise, the situation is the opposite this morning. In the initial trading, the Stockholm stock exchange, among others, falls by more than 2 percent, although the fall was even greater initially. This occurs after significant declines in Asia following the news that tariffs against China will be increased to a total of 104 percent, while nearly 60 other countries will also face new tariffs.
The European stock exchanges closed yesterday before we received the definitive tariff decision against China. So, yesterday was more like the calm before the storm. It was rather a recoil after significant stock market declines in recent days, says Pia Fromlet, euro economist at SEB bank to TT.
Global Consequences
Although Trump is now targeting China, which has received the highest tariffs, this will have global consequences, notes Pia Fromlet.
When China is affected by tariffs, the markets in Europe react because German exports are quite exposed to China. Everything is connected.
It's a lot of tariff noise that drives development. Then there's a general anxiety about Trump's policies, particularly the high budget deficits in the USA.
This is illustrated by the fact that the yield on ten-year American government bonds has risen significantly recently.
New Negotiations
Meanwhile, it has emerged that South Korea and Japan will now negotiate with the USA.
You simply have to wait and see what comes out of it. It's clear that it's positive that they're opening up for negotiations, but it must also happen, says Pia Fromlet.
Considering that Trump has taken a strong stance on his trade policy, I would be surprised if he makes significant concessions from these tariffs.
