The US and President Donald Trump's punitive tariffs against Mexico and Canada have now been introduced. Furthermore, fees on Chinese goods imported to the US are being increased.
All this has led to countermeasures from both Chinese and Canadian sides, and the trade war many feared is now a bitter reality.
There was a certain hope that tariffs would at least decrease, says macroeconomist Marcus Widén about the clear market movements that have now been triggered.
A Consequence
Primarily, the tech sector, including the semiconductor giant Nvidia, is among the major losers. Marcus Widén sees this as a consequence of the sector having performed extremely strongly in 2024 and therefore having a higher fall.
The big question, however, is what lies ahead and primarily how the stock market will develop? Widén emphasizes that the uncertainty is enormous, especially considering what happens with tariffs against Europe.
When the dust has settled, say in six months, it will likely be a situation with higher tariffs than we've had but lower than those initially introduced. It feels unrealistic that we'll end up with 25 percent, he says.
Driving Inflation
From an American perspective, Trump's tariffs have been seen as something that can drive inflation further for American consumers. The price of timber for house construction, for example, has skyrocketed to its highest level since August 2022, and if inflation were to rise now, it would mean that the American central bank, the Federal Reserve, would have to wait even longer for potential interest rate cuts.
This is traditionally bad news for the stock market. One aspect that has started to receive increasing focus from investors is signals of a deteriorating economic situation in the US, which would force the Fed to act.
They've started to swing a bit in the last few days, says Widén about the market's view on the number of interest rate cuts from the American side.
Over the past few months, the Stockholm stock exchange, like European markets, has performed strongly. Just defense initiatives from European sides can contribute to spreading effects within the European economy, Widén assesses.
