US tariffs imposed upon Canada, Mexico and China came into effect overnight and the trade wars began. Canada responded with across the board 25% tariffs on US Goods and services, while China chose to impose selected and targeted tariffs, in response. This was effective when Trump was in power last time, as the targeting was aimed at key industries that supported Trump, politically. Mexico has promised a response by this coming weekend. Global trade wars are now officially underway, but the US holds all the cards, as they operate massive trade deficits, in all of these jurisdictions. This sent equity markets tumbling once again and are now approaching the ‘technical correction’ territory. The USD continued to rebound, with the EUR jumping to 1.0540, while the GBP consolidated above 1.2700.The reserve gains stabilised, and the AUD settled around 0.6200, while the NZD looked to build above 0.5600. RBA minutes revealed a cautious attitude to further rate cuts, and this is dependent on inflation levels, remaining within expected guidelines. The ‘trade war’ in the Northern Hemisphere remains contained and expectations are high for the trade dependent commodity trading Countries. These tariffs are as much political as economic.
