The biggest winners and losers of Trump’s tariffs.

Well, liberation day came and went and honestly, it was an interesting watch.

If you managed to catch the speech by the U.S President Donald Trump then you would already know he brought out his own board.

A board of tariffs. 

10% Baseline Tariffs

Whilst the President was delivering his speech, a senior White House official told reporters that a baseline tariff would be imposed on ALL imports into the United States. 

This tariff will be implemented on April 5th. Some countries on the list will be pretty happy they were on it, especially the United Kingdom, who have been caught up in their own problems of late. So a 10% baseline tariff was very positive for the UK and the Great British Pound. 

Other countries that had a 10% baseline tariff include:

• United Kingdom.

• Australia.

• New Zealand.

• United Arab Emirates.

• Saudi Arabia.

• Turkey.

Off the back of this we saw some interesting moves in the FX markets, but the biggest winners include:

• GBP/USD +1.27% (current prices of writing).

• EUR/USD +1.47% (current prices of writing).

• JPY/USD +1.62% (current prices of writing).

• CHF/USD +1.77% (current prices of writing).

But a lot of this downside comes from the fact that the USD is weakening with the USD Index breaking through the 103.00 handle, heading towards the 100.00 2024 lows. 

This could open the door to some trading ideas as well though, for me my thoughts went out to the FTSE100. A lot of the companies within the index get their profits from the U.S, when or if the U.S market starts performing well again the UK companies may be at an advantage over those that have higher tariffs. This is something I will keep an eye on, as I don’t expect this turn around right away. In fact these tariffs could potentially push the U.S into a recession.

China gets smashed

The President then went on to outline specific tariffs which caused quite a stir within the markets. The one everyone was waiting for was the tariffs on China. How aggressive would it be, and how will markets take it.

Well, it wasn’t exactly great. 

Some of the custom tariffs include:

• China 34%.

• Vietnam 46%.

• Cambodia 49%.

• European Union 20%.

• Switzerland 31%.

• Japan 24%.

Some of these tariffs will be compounded onto others already imposed so the tariff on China could be much higher. 

Off the back of this the biggest losers were: 

• CNH/USD -0.7% (current prices of writing).

• Dow Jones -1.37% (current prices of writing).

• Dax -1.81% (current prices of writing).

• Silver -2.52% (current prices of writing).

• Crude Oil -3.68% (current prices of writing).

• Bitcoin -3.92% (current prices of writing).

• U.S 10 Year Yields  (current prices of writing).

As expected the biggest losers were risk assets, the U.S stock market in particular has been hit hard. The volatility index jumped over 20% reaching highs of 26.50. As we know when the volatility rises risk assets get hurt.

One of the biggest losers was actually TRUMP Coin. The crypto developed by the President fell a further 16% on the announcement, it seems even the crypto crowd don’t back the man who plans to bring crypto to the masses. From high to low the “meme coin” has fallen over 80%...yikes. 

Where do we go from here

For me nothing has changed too much in terms of the currency markets. We have been expecting USD downside for some time in line with the US10Y. This means that I will still be focused on EUR/USD, GBP/USD upside and USD/CHF, USD/JPY downside. 

USD/JPY and EUR/USD in particular stand out to me, if we see inflation rise in Japan then the BoJ are more likely to hike rates, which will compound the downside here. The price of USD/JPY has already broken though the daily swing lows around 146.50. 

EUR/USD with their ongoing stimulus could be a big driver for EUR/USD to head towards 1.1200 once again. 

Uncertainty still remains high, one of the big stories at the moment is that consumers are worried about the future at the moment, meaning they are less likely to spend money in the economy. So future growth could stall here, which in turn could bring inflation lower, leaving the USD weaker. 

Lower growth, could lead to higher unemployment and fears of a recession in the U.S could grow. Maybe that is what Turmp wants. He wanted to pay less on Government Debt, he also wanted a lower interest rate to do that. Maybe this is a radical way to go about forcing the markets into a recession to bring rates down.

How Gold performs from here will be interesting. Will the USD weakness fuel further purchasing of the shiny asset, initially we could see some downside as profit taking comes in. But if we see the stock market continue to fall, then I imagine the Gold safe haven trade will still be in play for now. 

For what is certain, the narrative around tariffs seems to have begun again, so volatility may remain high. As retail traders we could be at an unusual advantage. We have the flexibility to dip in and out of markets, and this could become handy over the next few months to years.