Trump’s threats in Europe launch another round of the market trick

Last week, the White House wrote to Governments all over the world inform them of exporting They will face if they do not reach an agreement with the United States, saying that the sanctions will enter into force on August 1.

Of course, international markets are staring at similar final dates in the past, only to be returned at eleven o’clock.

As a result, Wall Street learned to take the threats of the Oval Office with a little salt – to this point JPMorgan Chase, CEO Jamie Dimon, has described it as satisfied.

Analysts are not the only ones – previous governments are also Prepare for more chicken game, Jim Reed wrote from Deutsche Bank in a note seen by luck This morning.

“In the early hours of Saturday, Mr. Trump’s fixed cabinet was opened again and a message was sent to the European Union and Mexico to inform them that they will face 30 % of the customs tariff on August 1. To be fair, before a month Trump threatened the European Union with a tariff of 50 % so that you can say that this improvement.”

“The market will generally believe that this is often the tactic of negotiations and that we are unlikely to see such rates.”

The European Union response was measured. European Commission President Ursula von der Layen, for example, announced on Sunday a delay in counter -measures that were to enter into force this week in response to US sanctions on steel and aluminum.

“The United States sent us a speech with measures that would enter into force unless there is a solution to it, so we will also expand the suspension of our counter -measures until early August,” von der Line told reporters this week.

“At the same time, we will continue to prepare for anti -actions so we are completely ready.”

As such, markets and governments will be “hope and expect diplomacy to win.”

But he continued, “At some point, a person’s trick can be called. Trump is under pressure to decline with risk markets around its highest levels and bond markets are relatively stable at the present time. If a huge tariff is imposed on the first of August, in delicate holiday markets, we can get a major response in the market.”

Just another tactic

Sven Stein, Goldman Sachs analyst, wrote at the weekend that President Trump’s announcement was 30 % “surprise”, given A more constructive tone Both parties to hit in the past.

However, Shathan added that even this anxiety may undermine the fact that the White House may again use threats to accelerate along the commercial deals.

He wrote: “President Trump’s threat may be a negotiating tactic (at the present time), we maintain our basic line that a” framework agreement “to maintain current tariff rates, including 10 % on all goods and 25 % on steel/aluminum and cars.

“But we are still looking for the United States to impose a 25 % tariff on critical goods (including medications), which would raise the rate of effective American tariffs in the European Union to 16PP.”

European -based bank analysts thinking about the agreement.

Mark Hevelli, the chief investment official in UBS, also wrote in a joint note with her luck This morning: “If the administration will implement the above -mentioned definitions on August 1 and leave them at these levels, the probability of increasing profits and economic stagnation.

“Therefore, we believe that the administration uses this last round of escalation of customs tariffs to increase its ability to negotiate to the maximum and that it will ultimately lead to the cancellation of the escalation, especially if there is a new seizure of bond fluctuations and increasing bonds.”