Liberation day! Players liberated themselves from the USD, the stock market, and oil ahead of the announcement, and markets dropped on opening on Thursday. The already-in-place USMCA in the Americas limited the real-world impact of this new barrage of tariffs on US oil and gas. $2 trillion off US equity valuations were lost in just 16 minutes. These are particularly hard on China, with their 10-year yields down -8bps. The tariffs were higher than expected, and governments have responded by stressing the damage this will have to both economies. The art of the deal has begun, and countries are scrambling to come up with a deal with Trump. Russia was missing from the list, with Trump keeping a cool head following him saying he was pissed off at Putin earlier in the week. There is little trade to even sanction but US-Russia trade has taken a huge hit. Back in 2021, it was worth around $35 billion, but by 2024, it dropped to just $3.5 billion. So, there aren’t really any international winners in the tariff game this week, but China seems to be the immediate loser.
