News & Reports Archives

Despite the Recent Rebound, Will Investors in the Long-Term Continue to Dump Dollar Assets?

Written by IntaCapital Swiss on May 14, 2025. Posted in News & Reports. Leave a Comment

Although recent losses in US stocks have almost been wiped out, market experts believe that institutions such as pension funds and institutional money managers could in the long-term cut back on their massive exposure to US Dollar investments. Some investment bankers close to the action of certain money managers with trillions of dollars in U.S. Dollar asset exposure have started to cut back on these positions, mainly due to the fall out on the tariff war, flip flopping on policy, and Donald Trump’s continued attacks on the Chairman of the Federal Reserve, Jerome Powell.

Expert analysts advise that logically Europe is the current destination for the flight of capital from the United States, due to growth in the European economy being led by German spending in the defence sector and mixture of relatively cheap equity markets. Recently released data shows that in March 2025, the largest cut in history to U.S. equity allocations* with the shift out of the economy of the United States and into Europe was the sharpest since 1999. Further data released showed that in April 2025, outflows from ETFs (Exchange Traded Funds) domiciled in Europe that invest in U.S. debt and equities reached Euros 2.5 Billion, a level not reached since 2023.

*US equity allocation – refers to the portion of an investment portfolio dedicated to stocks of companies listed on U.S. stock exchanges. It’s a key component of overall asset allocation, which involves distributing investments across different asset classes like stocks, bonds, and real estate.

Although there have been recent gains by the US Dollar, overall, it is down 7% in 2025, with some institutions reporting spot transactions where institutional investors have sold the US Dollar and bought Euros on a sustained basis. One highly qualified and senior macro strategist in Europe announced that “If European pension funds were to reduce their allocations to 2015 levels, that would be equivalent to selling Euros 300 Billion in U.S. denominated assets. Some European pension funds have already started to trim their U.S. holdings position with Danish pension funds in Q1 2025 selling U.S. equities for the first time since 2023 and in the quarter Finland’s Veritas Pension Insurance Co reduced their exposure to U.S. equities.

Investors, analysts, economists etc, all talk about the cyclical effects in the various financial and commodity markets. What goes up must come down and vice versa. Remember the Global Financial Crisis of 2007-9 where liquidity completely dried up, banks were not lending to each other, investment bank(s) going bankrupt, bail outs of some of the largest financial institutions? Several years later everything it seemed was back to normal with the longest run of low interest rates seen for decades.

The point is whilst the United States is seeing massive outflows of capital in a reversal of the long-term trend where inflows were the order of the day where capital was attracted liquidity, market performance and economic growth. Some analysts advise that the current trend will only go so far given the liquidity and depth of the U.S. stock market and the circa USD 30 Trillion US Government Bond/Treasury market. Analysts report that many investors are sitting on the side lines wary of betting against the economy of the United States and its prospects for long-term growth.

United States and China Agree 90-Day Trade Deal

Written by IntaCapital Swiss on May 14, 2025. Posted in News & Reports. Leave a Comment

On Monday 11th May 2025, both China and the United States agreed to de-escalate their trade war with each other by announcing a 90-day pause on tariffs. The United States agreed to cut tariffs on Chinese goods from 145% to 30% and China agreed to cut tariffs on American goods from 125% to 10%. After the agreement was announced in Geneva, the U.S. Treasury Secretary said, “neither side wanted a decoupling and we do want trade, we want more balanced trade, and I think that both sides are committed to achieving that”. In a joint statement it was announced it had been agreed “to establish a mechanism to continue discussions about economic and trade relations. These discussions may be conducted alternately in China and the United States or a third country upon agreement of the Parties”.

A spokesperson for the Chinese Commerce Ministry said of the joint statement, “it is an important step by both sides to resolve differences through equal-footing dialogue and consultation, laying the groundwork and creating conditions for further bridging gaps and deepening cooperation”. This is a surprising outcome and took markets by surprise as before the Chinese had taken a hard-nosed stance demanding that the United States remove ALL tariffs on China before agreeing to come to the negotiating table. However, several analysts have pointed to the fact that this is just a 90-day ceasefire and pointed out this may not be a lasting peace between the two countries.

Global stock markets rallied on news of the China/United States trade agreement, with the S&P 500 and Nasdaq futures rising 2.7% and 3.7% respectively, plus the US Dollar rose 1% against a basket of currencies. Elsewhere, gold retreated by 2.8% as investors negatively impacted safe haven assets and Brent crude oil futures gained 2.8% rising to $65.71pb. In Europe, both France’s CAC 40 and Germany’s DAX both up just under 1%, Europe’s STOXX 60 and STOXX 600 rose 1.9% and 1% respectively and London’s FTSE 100 only rose by circa 0.50%. In Asia, both China and Hong Kong’s benchmark indices rose, with China’s CSI 300 rising 0.6% and Hong Kong’s Hang Seng index rising 0.8%.

Sadly, there are no guarantees that come 90 days, talks will have progressed further with further positive steps being announced between the two countries. Experts advise that many investors remain wary of the United States due to the flip flop policies of the Trump2 administration, plus President Donald Trump’s continued attacks on the Chairman of the Federal Reserve, Jerome Powell. Analysts advise that some institutions are acting like the risks have disappeared. If this is true, they must have been asleep since inauguration day, as many of their peers seem to be adopting a wait and see attitude. Analysts advise that in the past four weeks investors pulled $24.8 billion from U.S. stocks and with huge U.S. conglomerates such as Mattel Inc, United Parcel Service Inc and the Ford Motor Co recently withdrawing earnings guidance due to supply chain and tariff uncertainty being now extremely hard to navigate, there may be more unwanted surprises around the corner.

Bank of England Cuts Interest Rates

Written by IntaCapital Swiss on May 8, 2025. Posted in News & Reports. Leave a Comment

Today the BOE (Bank of England) announced a cut in interest rates with the MPC (Monetary Policy Committee) advising a reduction of 0.25% to 4.5%. The committee was divided, with five members voting for a ¼% cut, two members for a ½% cut, and the remaining two members voting to hold rates. Markets were surprised by the cautious approach, with President Trump’s tariff war weighing heavily on the outlook of the United Kingdom’s growth.

Caution was the watchword coming out of the MPC despite the divided votes saying that monetary policy easing should be “gradual and careful” in the light of volatility in the global economy which has been the result of President Trump’s wide-ranging tariffs. Forecasts by the BOE suggest that inflation will peak in Q3 2025 at 3.5% with growth being anticipated at 1% by close of business 31st December 2025, increasing to 1.25% for 2026 and then unchanged for 2027.

Following the decision by the MPC, Governor Andrew Bailey said in a statement “inflationary pressures have continued to ease so we have been able to cut interest rates today”. He went on to say “The past few weeks have shown how unpredictable the global economy can be. That is why we need to stick to a gradual and careful approach”. Traders had anticipated a bigger cut and were surprised by the decision, with one expert saying that this clearly is a hawkish cut.

The day before the MPC announcement was made, President Donald Trump revealed that the United States was about to make a trade deal with a major country, (later reported as the UK), and many commentators were then suggesting this would nudge the Bank of England into making a larger cut than they did. However, the BOE has made it crystal clear that they feel the greatest threat to the UK’s economy is from the global impact of U.S. tariffs. The BOE has given itself room to manoeuvre by saying “it will remain sensitive to heightened unpredictability in the economic environment and will continue to update its assessments of risks”.

As always, President Donald Trump is in the frame when it comes to important economic decisions, especially when it comes to Central Banks’ monetary policies on interest rates. As such, the BOE appears completely divided over interest rate decisions and which way monetary policy will go. Several experts have surmised that the BOE have been forced into being reactive rather than proactive or forward looking. Markets are suggesting another rate cut in August 2025, but for now the outlook remains uncertain.

Donald Trump Tariffs Pushes India and Great Britain into a Landmark Trade Agreement

Written by IntaCapital Swiss on May 7, 2025. Posted in News & Reports. Leave a Comment

In the days since President Trump announced he would be hitting all imports into the United States, countries around the world have been talking with each other regarding free trade deals. As a result of the fallout over Trump’s tariffs, India and Great Britain yesterday sealed a historic multi-billion-pound trade deal. The trade deal will significantly slash Indian tariffs on key products such as medical devices, whisky and cosmetics and will lock in reductions on 90% of tariff lines on UK exports to India, with 85% of these exports becoming fully tariff-free within 10 years.

Prime Minister Keir Starmer announced that this is the United Kingdom’s biggest agreement since Brexit, whilst his counterpart Prime Minister Narendra Modi said this is the first deal of its kind with a European economy. This agreement is the culmination of three years of talks under four British prime ministers and was certainly helped over the line by President Trump and his protectionist policies. Experts advise that the two prime ministers are both seeking to to build barriers or insulate them against the Trump tariffs, whilst at the same time looking for favourable deals with the United States.

Experts suggest that this agreement between India and the UK has huge potential for the future, especially in the alcohol sector where, for example, data released shows both Diageo and Pernod enjoy 12% of their revenue from India. The trade deal agreement shows that tariffs on whisky and gin will be reduced by 50% to 75% before being reduced to 40% by the 10th year, whilst in the automotive sector, tariffs will be reduced to 10% – under quota – from 100% over that period. Interestingly, part of the deal exempts Indian nationals working for less than three years in the UK from insurance payments.

Members of the main opposition conservative party immediately jumped on the national insurance agreement, saying the Prime Minister once again has put British workers last, having hiked national insurance payments on them whilst exempting Indian nationals. One member of the conservative party was heard to say, “Every time Labour negotiates, Britain loses”. Labour countered by saying that the tax break goes both ways and there would be no double taxation on Britons temporarily working in India, adding that this was just an extension of current agreements already in place with other countries.

India on the other hand, according to individuals close to the negotiations, has won reductions on circa 99% of tariff lines for goods exported to the United Kingdom. India according to the same individuals has also secured an agreement for access to services including Information Technology and have also secured recourse against those exports impacted by Europe’s carbon emission rules. Both India and the UK still have to iron out legalities before the agreement can be ratified through domestic ratification processes. Experts suggest the trade pact will take up to 12 months for the deal to come into effect.

According to analysts, the India/UK trade deal should in the long run increase bilateral trade by £25.5 Billion, UK GDP by £4.8 Billion and wages by £2.2 Billion. Furthermore, businesses in the United Kingdom will be able to enjoy a competitive edge over their international competition when entering the Indian market which is forecasted to be the world’s third largest by 2028. Analysts also suggest that, based on figures from 2022, India will be cutting tariffs by £400 Million when the deal comes into force which after 10 years will more than double to circa £900 Million. Whilst this is good news all round for importers and exporters alike, the reality is that the United Kingdom has to secure a decent trade deal with Donald Trump and if not, they will have to secure a similar pact with the EU (European Union) and other countries. However, the spectre of tariffs may push countries into trade deals that before they would not have contemplated.

United States Federal Reserve Holds Interest Rates

Written by IntaCapital Swiss on May 7, 2025. Posted in News & Reports, Uncategorized. Leave a Comment

In the weeks leading up to today’s interest rate announcement by the FOMC (Federal Reserve Open Market Committee), President Donald Trump has viciously attacked the Chairman of the Federal Reserve, Jerome Powell. In one damning statement the President said on his social media post to “cut rates pre-emptively to help boost the economy,” saying Powell had been “consistently too slow to respond to economic developments”.

President Trump also wrote “There can be no slowing of the economy unless Mr Too Late, a major loser, lowers interest rates now”. This criticism (he has also threatened to replace Chairman Powell) came after Powell’s warning that Trump’s import taxes were likely to drive up prices and slow the economy. Below, the vote on interest rates by the FOMC reflects Chairman Powell’s and the Federal Reserve’s commitment to that warning.

Today the FOMC voted unanimously to hold its key benchmark interest rate at 4.25% – 4.50% where it has remained since December 2024. Confirming the decision, Federal Reserve Chairman Jerome Powell said that officials were not in a hurry to adjust interest rates adding that tariffs could lead to higher inflation and unemployment. Chairman Powell went on to say, “If the large increase in tariffs are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment”.

Experts suggest that the unpredictability of President Trump and his back and forth on tariffs makes it very difficult for the Federal Reserve to predict the future of the economy. However, the statements coming out of the Federal Reserve confirmed that currently the economy is resilient with improving job gains and the economy growing at a solid pace. At the same time, analysts suggest that the Federal Reserve is in a holding pattern as it waits for uncertainty to clear.

Several analysts and experts have said that the Federal Reserve’s monetary policy direction depends on how the risks develop on inflation or jobs, or in a more difficult scenario whether unemployment and inflation risks increase together. If both increase together, the Federal Reserve will have to choose which direction to take monetary policy as a weaker job market calls for rate cuts and higher inflation would call for a tightening of monetary policy.

In his post-statement comments Chairman Powell also added that inflation ignited by tariffs could be short-lived or long-lasting depending on how high tariffs go. Just before the FOMC released their interest rate statement President Trump indicated that he would not back down on the current duties of 145% imposed upon China. The wait and see element of Federal Reserve policy is here to stay for a while with some financial analysts suggesting a cut of 0.25% in interest rates will come in July 2025.

Are Critical Minerals China’s Trump Card?

Written by IntaCapital Swiss on April 30, 2025. Posted in News & Reports, Uncategorized. Leave a Comment

Among the many things coveted by President Donald Trump, experts suggest “Critical Minerals”* are somewhere very near the top of the list. The reason why critical minerals are so important is that they are essential in many products such as electric car vehicles, military hardware, iPhones, clean energy, and semi-conductors, to mention but a few. There is a sub-sector or subset of Critical Minerals known as REEs** (Rare Earth Elements) and both play a crucial role in various technologies.

*Critical Minerals – These are a broad group of minerals considered essential and deemed vital for national and economic security. They are deemed critical due to their importance in modern technologies including defence and energy sectors, and all major industries, but are vulnerable to supply chain disruption. Examples of critical minerals are copper, lithium, nickel, cobalt, graphite, silicon, tungsten, platinum group metals and rare earth elements.

** REEs / Rare Earth Elements – Often confused with Critical Minerals, this subset makes up a highly specific category within the critical mineral family and are made up of 15 elements in lanthanide series within the periodic table plus two who are outside the periodic table. These elements are known for their unique magnetic, catalytic, and other properties. The word rare is confusing because these elements are not so rare in the earth’s crust but found in relatively low concentration. China currently dominates the market in Rare Earth Elements.

When President Trump had finished slapping China with increase after increase in punitive tariffs, one of the responses from Beijing was to introduce controls in exports on certain elements in the Rare Earth Element category. Indeed, the Rare Earth Elements chosen by the Chinese government could be very disruptive to the United States as it is designed to have maximum impact on the American military-industrial complex. Currently, China has the greatest global control over supply of these elements and is being used as a negotiating tactic as the US/SINO trade war escalates.

Many experts are now saying that some of the tariffs introduced by President Trump are self-defeating, and this scenario is playing out in the critical mineral and rare earth element arena. China is recognised as far and away the major player within this sector, but it has an even bigger grip on the refining and processing of these minerals/elements (aka the mid-stream) rather than just the mining. Indeed, recent data released by the US Geological Survey showed that China led production in 33 of 44 critical minerals, and figures show that in 2023 China mined in excess of 75% of the world’s graphite which is the main element used in the anodes of batteries.

Whilst the western world and the United States sat back and did nothing, China has spent many years building up their dominance in the critical mineral market, not only through domestic availability (including processing) but by investing in infrastructure in overseas destinations, in return for securing supplies of minerals. Experts suggest that it will take years for the United States to build up critical mineral infrastructure in order to bypass China’s current hold in the marketplace, so to this end could Beijing hold the Trump Card in trade negotiations with the United States.

Are Tariffs Negatively Impacting America’s AI and Semi-Conductor Ambitions?

Written by IntaCapital Swiss on April 30, 2025. Posted in News & Reports. Leave a Comment

President Donald Trump has made his desire public for U.S. global dominance in the AI and Semi-Conductor (chips) markets; however experts suggest that his tariffs will hinder domestic chip production and put a stop to his ambitions of dominating the worldwide AI market. They are portraying the escalation in tariffs which will perhaps end in an all-out trade war will dramatically increase costs in American data centres and the building of semi-conductor fabrication plants, with some analysts predicting that tariffs will become the single largest barrier to supremacy in the A1 arena.

Tech experts and industry leaders suggest tariffs will inevitably hit global supply chains, thus negatively impacting and disrupting medium to very large AI computing projects. This will be a blow to major tech companies such as Meta, Google, and Amazon who between them have pledged just for 2025, USD 300 Billion on computing infrastructure which will underpin AI projects. Furthermore, TSMC (Taiwan Semiconductor Manufacturing Company Ltd) has already committed USD 100 Billion to increase the capacity of chip production in the U.S. which will underpin the above-mentioned AI ambitions.

Potential supply chain issues are at the top of the agenda for many big tech executives, with one executive currently attached to a USD 500 Billion data centre enunciating that the delay of one single component could affect the whole project as the supplier is making business decisions brought on by tariffs. One only has to look at other industries like the European Wine Sector where shipments may be halted because impending tariffs are stopping suppliers putting a price on future orders. Elsewhere in the steel pipe manufacturing arena, tariffs on Chinese built ships/bulk carriers effect on supply chains can be located in Germany where port workers should be loading a first round 16,000 MT of steel piping bound for a huge Louisiana energy project, however due to the proposed levies, the cargo is now sitting gathering dust in a German warehouse.

In the GPU (Graphics Processing Unit)* market, Nvidia’s most advanced model is utilised Microsoft and Amazon in their cloud service providers platform, however these GPUs arrive in the United States as racks of servers or just a single rack which have been assembled in a number of different countries according to data released by Z2Data (supply chain data analysis platform). This is where the economics get blurred because although GPUs have been exempt from tariffs, the many components which make the GPU have not been exempt. Experts suggest that importers in the U.S. will be hit with huge costs as component and product categories are massive and it is suggested that even the smallest component can bring the supply chain to a halt.

*Graphics Processing Unit – is a specialised electronic circuit designed to accelerate computer graphics and image processing. The GPU is essential for AI, particularly for tasks like training deep learning models and handling complex computations. Their parallel processing capabilities and high memory bandwidth allow AI to significantly accelerate their workloads.

Experts are saying that even if chips were produced in the United States, they would be more expensive to produce despite the 32% proposed tariff on chips produced by Taiwan’s TSMC, as tariffs would push up prices on all key tools and materials. They went on to say the biggest loser would be American producers of chips, as despite tariffs it will still be cheaper to factories and manufacturing capacity outside the United States, dashing Trump’s dream of domestic chip manufacturing. This is a catch 22 situation for President Trump, for once he cannot have it both ways having his cake and eating it, and analysts wait to see how he will solve this particular conundrum.

The European Central Bank Cuts Interest Rates

Written by IntaCapital Swiss on April 17, 2025. Posted in News & Reports. Leave a Comment

Today, for the seventh time since June 2024, the ECB (European Central Bank) cut interest rates by 25 basis points, with the key deposit rate now standing at 2.25%, which according to data released by LSEG (London Stock Exchange Group) was anticipated by 94% of financial markets. Experts suggest that the cut comes amidst global economic and geopolitical uncertainty giving fears to falling economic growth within the Eurozone economies. The decision to cut rates by a 1/4 of 1%, was according to the President of the ECB Christine Lagarde, unanimous, with no member arguing for any other type of cut.

In a statement, President Lagarde advised, “Downside risks to economic growth have increased, with a major escalation in global trade tensions and associated uncertainties, will likely lower euro-area growth by dampening exports, and it may drag down investment and consumption. Deteriorating financial market sentiment could lead to tighter financing conditions”. Earlier this month the ECB was, according to experts, ruminating as to whether or not to hold interest rates, but Donald Trump’s tariffs soon put a stop to that, ensuring a unanimous vote today to cut interest rates.

The policy move to cut interest rates also became more attractive as data revealed that the ECB’s benchmark target rate of inflation of 2% was on the road to being achieved, whilst at the same time falling inflation was given a boost by falling energy costs. However, experts are fearful that potential tariffs of 25% and an all-out Eurozone U.S.A. trade war will banish hopes of revival in the economies of the European Union membership countries. Currently experts are predicting another cut in interest rates at the next ECB meeting in June this year, where the rate will then be held at 2% for the rest of the year. However, ever increasing market volatility has left some analysts suggesting even further cuts in the cost of borrowing after the June announcement.

The ECB also announced that in future they will not be pre-committing to any particular rate path, indeed interest rate decisions will be based on its assessment on the inflation outlook in light of incoming financial and economic data, the dynamics of underlying inflation, and the strength of monetary policy transmissions. As far as the Euro is concerned, the common currency has this month strengthened as investor sentiment has proved less resilient to other economies and more resilient towards the Euro arena. Once again, all eyes are on President Trump and the EU trade negotiating team to see if they can come to an agreeable solution regarding tariffs.

Confidence in U.S. Government Bonds Can No Longer be Taken for Granted

Written by IntaCapital Swiss on April 16, 2025. Posted in News & Reports. Leave a Comment

Amongst the financial carnage inflicted on the global markets by the introduction of punitive tariffs by President Donald Trump, global investors have been fleeing to safe haven assets, which for the first time in living memory does not include Treasuries or U.S. Government Bonds. Treasury bonds have had a tradition of being first in line for investors during adverse conditions which was true during the Global Financial Crisis, on 9/11, and even when the United States’ credit rating was cut, where Treasuries were seen to rally.

However, in today’s markets, and as Donald Trump has declared war on global trade, US Treasuries are now being questioned as the world’s best safe haven as can be seen in their surging yields*. Many experts and analysts agree that US Government Bonds and the US Dollar (which has in recent days plunged), rely on the world’s confidence in the financial and political systems of the United States in order to get their strength.

*Treasury Yields – Yields and Treasury prices have an inverse relationship as when Treasury prices rise yields fall and vice versa. Therefore when investors sell treasuries the yield rises and when they buy the yield falls.

The faith in the systems of the United States is now being tested as Thursday saw foreign investors en masse retreating for US assets with equities, treasuries, and the USD Dollar all falling together. The US Dollar fell against the Swiss Franc and the Euro by the most in 10 years, whilst 30-year Treasury yields headed north to 4.87% surging by 13 basis points. The point here is that when investors in the United States and from global markets sell off stocks, they usually find safety in U.S. Government bonds, so following the stock market route yields on treasuries rose, which is totally the opposite of trends in the near and distant past.

Economists have noted that the problems in the U.S. Government Bond market will have deep implications for the global financial system, because as Treasuries are (or were) regarded as “Risk Free Asset” they are utilised as a benchmark determining the price of stocks, mortgage rates, sovereign bonds, nearly everything including collateral for intra-day lending in the amount of trillions of US Dollars. US assets in general now appear to be being repriced as sentiment towards the U.S. as a safe haven diminishes.

There are however some dissenting voices who have concluded not everyone is losing faith in the United States’ political and financial systems. Indeed, some experts expound that long-end Treasury sell-offs are due to technical factors such as hedge funds unwinding leverage trades, with Treasury Secretary Scott Bessent backing these views. There was even an auction of USD 22 Billion 30-year bonds on Thursday with investors, despite tariff driven volatility, showing solid demand as they did for the sale of 10-year bonds on Wednesday.

However, whatever views are held it is generally believed by experts that a message has been delivered to The White House that confidence in U.S. Government bonds can no longer be taken for granted. The lack of clarity in this administration’s policies together with their President antagonising allies and enemies alike, including their largest creditors, through his determination to rewrite the financial and trading global rules, will in the eyes of many see the rest of the world in the long run look elsewhere for safe haven assets.

China Retaliate with the Imposition of 125% Tariffs on all U.S. Imports

Written by IntaCapital Swiss on April 16, 2025. Posted in News & Reports. Leave a Comment

So the all-out trade war escalates between the United States and China as Beijing announces retaliatory tariffs of 125% (up from 84%) as Donald Trump confirmed that tariffs on China are now effectively 145%. Officials in China confirmed that the 125% tariff will remain no matter if the White House decides to increase tariffs as the levies are now so high there is no longer a market for goods in China imported from the United States.

Chinese experts in this arena have advised that there is no sign from officials from either the United States or China that their respective governments would start negotiations which would avoid a negative impact on global supply chains. However, one official from China’s Commerce Ministry was quoted as saying, “Beijing is open to negotiate with the United States on an equal footing”.

Once again Treasury Secretary Scott Bessent was on the offensive saying, “It’s unfortunate that the Chinese actually don’t want to come and negotiate, because they are the worst offenders in the international trading system”. He went on to say, “They have the most imbalanced economy in the history of the modern world, and I can tell you this escalation is a loser for them”.

Analysts suggest that due to the drag from U.S. trade tensions and slower global growth, China’s GDP (Gross Domestic Product) for this year will be 4%. They further advised that exports from China to the United States only accounted for circa 3% of GDP, however there is a possible negative impact on employment with circa 10–20 million Chinese workers involved with exports to America.

Elsewhere the previous U.S. Treasury Secretary under President Biden has unleashed nothing less than a massive broadside against President Trump and his economic policies, saying, “President Trump has taken a wrecking ball to the U.S. economy”. She commented that Trump and his officials have declared that they had inherited an economy in a “state of calamity and catastrophe”. However, Yellen noted the Economist back in October 2024 said the U.S. economy was the envy of the world.

As already advised previously on this website, U.S. tariffs may well drive other countries including those in the western world further into the arms of China. China is already Europe’s largest trading partner and at a meeting today between Chinese President Xi Jinping and Spanish Prime Minister Pedro Sanchez, Xi said that China and the EU (European Union) must join together in defending globalisation and oppose unilateral acts of bullying. Already the Spanish Agricultural Minister has said, “Spain will pursue closer trade ties with China in the interest of its citizens”.

As Democrats and some Republicans, along with leaders and officials of trading partners with the U.S,. a timely reminder is that the U.S. trading deficit with other countries amounted to USD 130.7 Billion in January 2025 and USD 122.7 Billion in February 2025, and many economists have voiced their wonder about how previous administrations and congress were so happy with this situation.

Obviously Donald Trump is not and has the bit between his teeth but perhaps there was a better way of rebalancing the deficit away from using tariffs. Only time will tell, but the U-turn on tariffs (10% across the board apart from China) giving a 90-day pause, is perhaps part of his intended policy (as confirmed by U.S. Commerce Secretary Howard Lutnick) bringing trading counties to the negotiating table.