Tariffs to wait for after Trump's tariffs

The market withstood Donald Trump's tariff threats. But when the threats became reality, the American stock exchange fell. And the others will likely follow suit. On Monday, there will be negative reactions on the stock exchanges, says Robert Bergqvist, senior economist at SEB.

» Published: February 01 2025

Tariffs to wait for after Trump's tariffs
Photo: Jessica Gow/TT

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The USA introduces tariffs against Canada, Mexico, and China – one of USA's President Donald Trump's election promises.

Trump strongly believes in tariffs, both as a source of financing to reduce the budget deficit and to initiate negotiations with other countries.

To change or withdraw the tariffs, Robert Berqvist, senior economist at SEB, believes that it is essential for the market to react negatively.

I think that's the only thing that can stop him. Trump is very sensitive to what happens with the American stock exchange and wants to keep it in good spirits.

Not good for the global economy

So far, primarily the US stock exchanges have held out, according to Bergqvist. It was only when the tariffs became more concrete on Friday that the market began to react.

The American stock exchange, especially S&P 500, was almost at a plus one percent before these news started coming. When the stock exchange closed, it stood at minus 0.5 percent – we got a stock market fall of about 1.5 percent in just a few hours, he says.

A development that Bergqvist believes will continue.

On Monday, there will be negative reactions on the stock exchanges. This is not good for the USA, and it's not good for the global economy that this trade war continues to escalate.

Calling for calm

But Bergqvist calls for calm and reminds that as a shareholder, regardless of whether it's direct or fund-based ownership, it's essential to have a long-term perspective.

I don't think you need to be particularly worried. If the analysis is correct that the White House and Trump are sensitive to the American stock exchange going down, then Trump will back down.

At the same time, Bergqvist warns that Trump's first 100 days in power can be a rollercoaster.

As a saver, you should count on us being in a situation where it will be very shaky and turbulent. But that doesn't mean it's a downward trend we're seeing ahead of us.

If Trump were to introduce general tariffs and the world were to respond in kind, it would be very serious for economic growth and even the stock exchanges could be affected.

Then we're in a very dangerous loop with an escalating trade war. The uncertainty itself is negative for the entire system.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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