Donald Trump trade conflict: Westpac reckons US economy | Australian Markets
More analysis is displaying President Donald Trump’s suite of new taxes on imports will trigger self-inflicted harm to the US economy.
Financial markets have been hit laborious in current weeks amid uncertainty over the tariff plans and as US trading companions hit back with their own taxes. The ASX200 is down practically 10 per cent since mid-February.
Reports on Sunday instructed the latest iteration of the tax plan could be watered down to give attention to a small quantity of key international locations.
Economists from Big Four bank Westpac mentioned the US and its largest trading companions have been “most vulnerable” from his trade-taxing coverage.
Leaning on analysis from the Peterson Institute For International Economics, Westpac mentioned the US economy would shrink 0.6 per cent by means of 25 per cent tariffs on Canada and Mexico — assuming each international locations retaliate.
The impression on China could be barely much less, at about 0.5 pr cent. Mexico’s annual output would drop 2.3 per cent, whereas Canada would slide 3.4 per cent.
But the impression of the taxes on Australia could be minimal.
“This is intuitive given our trade deficit with the US and as we primarily export commodities to China and Asia,” Westpac mentioned.
“Active stimulus by China would increase demand for these goods.”
The chaos created by Mr Trump’s negotiating strategy delivered a shock increase in Australia, notably for WA.
Exports to the US have jumped in current months because of a spike in gold shopping for — normally seen as a safe-haven investment during instances of uncertainty.
“Australia’s exports to the United States have surged in recent months, mainly due to higher gold exports,” Westpac mentioned.
“This is part of a broader trend, with US imports rising sharply from most markets, in particular for metals imports.
“Likely, this reflects the front-loading of shipments ahead of import tariff implementation.”
On Friday, US assume tank the Tax Foundation warned Mr Trump’s tariffs would shred more than 300,000 full-time equal jobs.
Economists broadly see tariffs as damaging residing requirements as a result of they result in increased costs for households and companies, whereas forcing international locations to raise manufacturing in inefficient industries.
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