Tariff madness

The election of a populist and anti EU government in Italy sent European equity markets and the Euro into a tailspin while the trade tariffs imposed by the Trump administration caused anxiety, particularly in the developing markets of Asia and Latin America.

While it is probable that the new Italian government will be heavily constrained in what they are able to achieve, the trade issues are more disturbing for international trade and global growth.

However, while the present round of tariffs is unlikely to have much economic impact it is the escalation which investors (and consumers if they only knew it) fear the most.

However, there are already some unintended consequences appearing from this policy such as Harley Davidson shifting some manufacturing to Europe and job losses in the US because of the rise in steel prices.

The tariff situation may get worse before it gets better but I believe that a compromise will be found over coming months – which presents a great long term entry point for some of these battered markets over coming weeks.For regulatory disclosures, please visit www.hedleyandco.co.uk/publications and click on Hedley Regulatory Disclosures.