Us Tariffs Causes Risk Aversion

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Us Tariffs Causes Risk Aversion

Us Tariffs Have Led To Risk Aversion

The global risk sentiment has deteriorated due to the US tariffs on the rest of the world. However, this has allowed the US Dollar to gain strength, according to Scotiabank.

The USA has put a baseline tariff of 10% on most countries. On top of that, around 15% additional tariff is also applied to a lot of countries.

Tariffs Will Affect The Us Economy

Meanwhile, the rate is around 35% on some exports from China and around 39% for the Swiss exports. And if the countries fail to reach the goal, a global tariff will be applied on them by the US government.

So, the average tariff on most countries is around 13%, but Scotiabank believes that it will rise even further. At the same time, these tariffs will lead to slow consumption in the USA and will fuel inflation.

In fact, the global economy is at risk of a slowdown, including the USA, due to the recent tariffs. But the one winner from this whole ordeal is the US Dollar, which is expected to gain strength in the coming months.

Looking ahead, the markets will have a lot of things to digest. This includes the rate decision, new tariffs, inflation, and the ever-changing geopolitical situation.

Also, the recent NFP data shows that it is now heading towards the 100K figure. Now, that's a dangerous trend given the increase in the population.

Over the long run, the tariffs will also lead to a higher unemployment rate in the USA. So, the bottom line is that the tariffs may boost the economy in the short term. However, its effects will be disastrous in the long run.

At the same time, the strength of the US Dollar will be short-lived. In the long run, the US Dollar is expected to lose against other currencies due to rate cuts, inflation, & other risks.

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