Trading Archives

Is the US Dollar Under Threat Due to the Policies of Donald Trump?

Written by IntaCapital Swiss on July 2, 2025. Posted in News & Reports. Leave a Comment

Donald Trump was inaugurated on Monday 20th January 2025, and since his elevation to the White House, the greenback has lost over 10% of its value against the Swiss Franc, Sterling, and the Euro. Global investors have been turning away from President Trump’s policies, and there is no better measuring stick for their renunciation of his policies than the US dollar. The last time the US Dollar fell so badly was post the Global Financial Crisis 2007 – 2009, when in 2010 the Federal Reserve in order to prop up the economy was excessively printing money.

However, this time around there is no global financial crisis; it is the policies coming from the White House such as expanded global tariffs, the on-going fight between President Trump and the Chairman of the Federal Reserve to push interest rates down, where Chairman Jerome Powell* refuses to budge. Furthermore, there are two further policies which are scaring investors such as the open legal warfare against those who stand up against his policies, and “the big beautiful bill” which has just passed the Senate 51-50, which many experts feel will add to an already massive deficit. These are just a few of the pillars that make up the current administration’s policy and according to the value of the US Dollar are driving global investors away.

*Jerome Powell and Tariffs – On Tuesday of this week, The Chairman of the Federal Reserve Jerome Powell noted that the FOMC (Federal Open Market Committee) would probably have reduced interest rates further without the White House’s policy of expanding global tariffs. He went on to say, “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We think the prudent thing to do is to wait and learn more and see what the effect might be”.

Experts suggest that tariffs will put upward pressure on inflation and certainly slow economic growth, and the President continuing to flip-flop on the specifics of levies and halting progress on trade agreements has given much worry and uncertainty on the outlook of the US economy. However, having said that, recently released economic data shows that tariffs have yet to impact prices or the labour market with further data showing that job openings rose in May, the highest level since November 2024.

Interestingly, many market experts, traders, economists, and analysts suggest that Donald Trump and his colleagues are ambivalent to the fall in the US Dollar. When questioned as to whether they support a strong dollar, the answer is always inevitably “yes” but little seems to be done in halting the current decline. Analysts suggest the financial markets feel that the White House is happy to see the US Dollar slide downwards in order to boost manufacturing in the United States.

Such speculation has led some observers to suggest that the President is playing with fire as the cost of financing the government has exploded to over USD 4 Trillion as the budget deficit continues on its path like a runaway train. Financing mainly comes from overseas

investors, and when it comes time sell up and bring their money home, a sliding greenback means they lose money. This, some observers feel, could lead to a vicious cycle where global investors continue to pull their funds out of the USA driving up borrowing costs resulting in further declines in the US Dollar with further economic uncertainty and so on and so on. If overseas investors get a whiff that a declining greenback is government policy the results could be catastrophic for the US Dollar.

As the world’s reserve currency, the US Dollar is already on the decline because at the close of business 2014 data showed the greenback accounted for 65% of global foreign exchange reserves and as at close of business 2024 this figure stood at 58%. However, that said, swift data shows that as recently as August last year the US Dollar is used in 49.10% of global payments and as at December 2024 data shows that 54% of global traded invoices are transacted in US Dollar and 88% of foreign exchange transactions are done in USD Dollars.

Analysts agree that in the near future, the US Dollar will undoubtedly keep its status as the world’s reserve currency. However, if the US Dollar continues to slide it will come under severe pressure from foreign investors, and there are already mutterings coming out of the ECB (European Central Bank) that the Euro could, in a few years’ time, be in a position to take over the mantle of the world’s reserve currency. The US has amassed a debt pile of USD 29 Trillion (100% of GDP) and it’s not stopping, it has lost its last remaining AAA rating and the budget deficit over the past few years has increased to 6% of GDP. President Trump without a doubt will have some short-term problems coming his way, but will things have turned around by the end of his presidency, and what will his legacy be?

Trump’s Tariffs Hobble U.S. Markets Whilst European Stocks Forge Ahead

Written by IntaCapital Swiss on June 4, 2025. Posted in News & Reports. Leave a Comment

The week ending 30th May 2025 saw equities in Europe as a clear winner globally, whilst tariffs and trade wars initiated by President Trump have hampered and shackled the markets in the United States. Recent data released showed that out of the world’s ten best performing stock markets, eight can be found in Europe. Indeed, this year in US Dollar terms Germany’s DAX Index* has rallied in excess of 30% including such peripheral markets as Hungary. Poland, Greece, and Slovenia.

*The DAX Index – The DAX or its full name Deutsche Aktien index 40, is Germany’s benchmark stock market index, and reflects the performance of 40 of the largest and most liquid German companies trading on the Frankfurt Stock Exchange. It is a key indicator of the health of the German economy.

The European STOXX 600 Index* is currently beating the U.S. S&P 500 by 18% (reflected in dollar terms) which as data shows is a record, which experts advise is being powered by a stronger Euro and Germany’s strong fiscal spending plan both current and in the past. Market analysts with knowledge of this arena suggest there is more to come due to attractive valuations and resilient corporate earnings, which when compared to America’s which is being gripped by fiscal and trade debt, make Europe a safer bet.

*European STOXX 600 Index – This index is a broad measure of the European Equity Market. Based in Zug, Switzerland, it has a fixed number of components and provides extensive and diversified coverage across 17 countries and 11 industries within Europe’s developed economies, representing circa 90% of the underlying investible market.

Equity bull experts suggest that Europe is back on the investment map, with some investment managers saying that recently there has been more European interest from investors than there has been in the last decade. Bulls went on to say that this rally may well be self-feeding and if European stocks continue to rise, they will be likely to attract fresh investment from the rest of the world. Indeed, some analysts suggest that if the trend away from America continues over the next five years the European markets could expect an inflow of circa USD 1.4 Trillion (Euros 1.4 Trillion.) Analysts suggest the gains so far this year were the result of a proposal by the German government to spend hundreds of billions of Euros on defence and infrastructure with some economists suggesting that this will boost growth across the European bloc from Q2 2026.

Elsewhere, a slew of Europe’s peripheral markets have had performances that have made investors sit up. For example, Slovenia’s SBI TOP Index is, according to data released, the second-best performing stock market up 42% (in dollar terms) just behind Ghana’s benchmark the Ghana Stock Exchange GSE-CI, (tracks all the performance of all company’s trade on the Ghana Stock Exchange). Other peripheral stock exchanges that have done well are Poland’s WIG20) Index up 40% whilst the benchmarks in both Hungary and Greece are both up circa 34%.

Experts suggest that 2025 could be a good year for European Stock Markets as some professionals are already betting that European stocks will outperform their counterparts in America. President Trump’s tariffs, the loss of the country’s AAA status, looming trade wars, and the current fiscal deficit of USD 1.9 Trillion (and predicted to climb), are all factors as to why investors are turning their backs on the US markets. Whether this will last, we will have to wait and see if all of Donald Trump’s predictions come true. Meanwhile back in Europe data released show that corporate earnings are in the spotlight having risen 5.3% in Q1 2025 against predictions of a 1.5% decline, another reason to perhaps bet on Europe.

Trump Reignites Trade War with EU as he Threatens 50% Tariffs on the Bloc

Written by IntaCapital Swiss on May 28, 2025. Posted in News & Reports. Leave a Comment

On Friday 23rd May, President Trump threatened to impose a 50% tariff on June 1st, 2025, on the EU (European Union) stating that current negotiations on trade between Washington and Brussels were going nowhere. President Trump has been complaining for a long time that the EU bloc has been unlawfully targeting U.S. companies with regulations and lawsuits, plus he feels that the Europeans have been deliberately taking their time over the current trade negotiations. Originally, on “Liberation Day” 2nd April 2025, the EU had been marked down for 20% tariffs, but were reduced to 10% until July 9th, to give enough time for trade talks to find common ground and a solution.

In response to the tariff threats by President Trump, the EU Trade Commissioner, Maroš Šefčovič, said “EU/US trade is unmatched and must be guided by mutual respect, not threats. We stand ready to defend our interests”. He went on to stress “the EU’s fully engaged, committed to securing a deal that works for both of us”. Many of the European governments reacted to the tariff threat warning that higher tariffs would indeed be damaging to both sides. Meanwhile, back in the Oval Office, President Trump also announced to reporters that new tariffs would be imposed unless EU companies moved their operations to the United States.

However, on Monday 27th May, following a phone call between the President of the European Commission Ursula von der Leyen and Donald Trump, where the EU signalled a more conciliatory approach by agreeing to accelerate trade talks, the President of the United States agreed to extend the 50% tariff deadline to July 9th, 2025. Experts suggest that one of the major roadblocks that face the EU is that they feel America is not making it clear exactly what they want, and they still do not know who is speaking for the President. EU Trade Commissioner Maros Sefcovic has spoken twice with U.S. Commerce Secretary with his statements adopting a more malleable tone, gone was the previous rhetoric of “we will defend our interest rates”.

After Trump’s announcement last Friday, the markets reacted with the usual predictability with the Nasdaq down 1%, the broader S%P 500 down 0.68%, the STOXX EUROPE 600 index down 0.68%, Germany’s Dax and France’s Cac 40 both ended the day down over 1.5%. The US Dollar took a beating again, down by as much as 0.8% on the Bloomberg Dollar Spot Index*, slumping to its lowest level since 2023. Experts suggest that the threat of punitive tariffs then removing that threat gives many investors and traders in the financial markets a lack of confidence in the Presidency translating to a lack of confidence in the greenback. Whilst many indexes recovered on Monday 26th May, the US Dollar continued its decline which not only included the slap happy way tariffs are doled out, but also Trump’s tax bill which is expected to add hundreds of billions to the federal deficit. Meanwhile data released from the Commodities Futures Trading Commission show hedge funds, asset managers and other speculative traders continued to bet against the US Dollar.

*Bloomberg Dollar Spot Index – This index is a benchmark that tracks the performance of the US Dollar against a basket of major global currencies. It’s designed to provide a

comprehensive view of the dollar’s strength by including currencies from both developed and emerging markets that are significant in international trade and liquidity.

A full-blown trade war between the EU and the United States is according to experts not in anyone’s interests. The repercussions to both protagonists’ economies would be negative and will undoubtedly have a downside effect on global trade as well. No matter what is currently being said, both the U.S. and the E.U. are miles apart in their negotiations, with President Trump having already rebuffed a trade deal from the E.U. last Thursday 22nd May. Despite improved rhetoric from both sides those close to the negotiations are fearful that come July 9th, 2025, a consensus may not have been reached.

United States and China Trading Update

Written by IntaCapital Swiss on May 21, 2025. Posted in News & Reports. Leave a Comment

Without a doubt, President Trump’s tariff war has severely disrupted trade between the two economic powerhouses, and nowhere else is this as dramatically highlighted as Apple’s iPhone and mobile devices, where shipments to the United States in April 2025 are down to levels not seen since 2011. Customs data revealed that Smartphone exports slid 72% or circa USD 700 Million in April, outpacing by a long way an overall drop in Chinese shipments to the U.S. of 21%.

Elsewhere in early May 2025, the busiest container hub in the United States, the Port of Los Angeles, saw a drop in shipments by circa 30% as the weight of Trump’s tariffs took their toll. Data released shows that retailers and importers were the most affected, especially those linked to China. Bilateral trade in 2024 between China and the U.S. was circa USD 690 Billion and investors feel that tariffs will significantly erode this figure.

Despite the temporary reprieve in tariffs between the two nations, data reveals that the trade war has left a deep unwelcome imprint on Chinese exporters with many looking to new markets away from the United States. Well known in the trade insurance arena, Allianz Trade having conducted a poll of Chinese exporters found 95% will or already are more determined than ever to double down on exporting their goods to non-U.S. markets.

China’s coastal city of Ningbo is host to China’s second largest port (Ningbo-Zhoushan Port) by cargo tonnage where local businesses, despite the de-escalation in tariffs still plan to reduce exports to the United States and “Go Global’. Senior experts and economists at the Economic Intelligence Unit confirmed this fact whilst also confirming Southeast Asia* remained the favoured destination among many businesses seeking to move production away from China.

*Southeast Asia – comprises eleven countries Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam. Note that many Chinese companies are somewhat wary of Vietnam with concerns over rising cost weighed against an attractive labour market. Indonesia appears to be the favoured destination.

Experts in the Sino – U.S. arena suggest that decoupling in the medium term seems to be the favoured outcome as Chinese exporters move away from the United States and American companies look to increase efforts to move production out of China with Apple already accelerating a shift in production to India. Apple was railed against by President Trump for not moving production back to the United States, experts close to the situation have said that scenario is unfeasible. The deal struck in Geneva between China and the United States brought tariff rates down to levels before the tit-for-tat tariff skirmish. But with time eating into the 90-day de-escalation agreement, the world will hold their breath whilst these two economic giants try and come to a sensible agreement.

Moody’s Downgrades the United States’ Sovereign Credit Rating

Written by IntaCapital Swiss on May 21, 2025. Posted in News & Reports. Leave a Comment

On Friday May 16th, 2025, the credit rating agency Moody’s downgraded the Unites States’ sovereign credit rating from Aaa (equivalent to AAA at Standard & Poor’s and Fitch) by one notch to Aa1 due to growing concerns over the nation’s USD 36 Trillion debt pile. Moody’s is the last of the three most important and recognisable rating agencies to downgrade the sovereign credit rating of the United States, with Fitch downgrading in 2023 and Standard and Poor’s downgrading in 2011. The United States has held a perfect credit rating from Moody’s since 1917, however the rating agency back in November when 2023 advised it might lower the U.S. credit rating when it changed its outlook from stable to negative.

The reaction from the White House was predictable, with spokesman Kush Desai saying, “If Moody’s had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded.” In another statement the White House advised that the administration was focused on fixing Biden’s mess. The White House communications director Steven Cheung also laid into Moody’s singling out their chief, Mark Zandi, who he said was a political opponent of President Trump, and is a Clinton donor and advisor to Obama. He went on to say, “nobody takes his analysis seriously and he has been proven wrong time and time again”.

Moody’s pointed out that in 2024, the government spending was higher than receipts by circa USD 1.8 Trillion, being the fifth year in a row where fiscal deficits have been above USD 1 Trillion. Debt interest has been growing year on year and eating into sizeable chunks of government revenue, with Moody’s pointing out that federal interest payments in 2021 absorbed 9% of revenue in 2021, 18% in 2024, and predict circa 30% by 2035. The GAO (Government Accountability Office), which is seen as an investigation arm of Congress has called the current situation unsustainable and went on to say that unless there is a change of policy debt held by the public will be double the size of the national economy by 2047.

After the announcement on Friday 16th, markets were unnerved on the following Monday morning, with stock markets recovering by the end of the day with experts confirming that markets had shrugged off the news, but some were advising that investors should be wary of complacency. However, some analysts advise the downgrade is a warning sign and may be the catalyst for profit taking after a huge run in the past month for equities. At the end of the day, United States Treasury Bonds are currently viewed by global investors as the safest investment in the world, and a downgrade by Moody’s is unlikely to stifle appetite for treasuries.

For most money managers and other global investors and market participants experts advise that the downgrade was probably seen coming for some time and lands in a market already wary of risks from tariffs and fiscal dysfunction. However, currently President Trump is pushing the Republican controlled Congress to pass a bill extending the 2017 tax cuts, a move some analysts predict will add many trillions to an already highly inflated government debt. However, hardline Republicans blocked the bill denuding deeper spending cuts. There was volatility in US Treasuries on Monday after the Moody’s announcement with 30-year treasuries breaking through the symbolic barrier of 5% (first time since October 2023) but slipped back to 4.937% by close of business. Experts suggest that the bond market had already priced in risk premium for government economic policy already in disarray, meaning Monday’s upward move in yields was just a knee-jerk reaction.

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.

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.

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.

Tag: Trading