Trump’s 60% China tariffs would roil markets

The announcement by former US president Donald Trump that he would impose additional tariffs on Chinese goods, potentially exceeding 60%, if he were to win the US election in November, is sparking concern among global investors.

This move, if implemented, could have profound implications across various sectors, causing volatility in financial markets, disruptions in supply chains and fluctuations in currencies.

Sector-specific impact

The technology sector, highly dependent on international supply chains, would face significant challenges.

According to the Information Technology Industry Council (ITI), a 25% tariff on Chinese imports could result in the loss of 934,000 jobs and a decline in the US GDP by 0.3%. Tech giants, reliant on Chinese manufacturing for components, might see increased production costs, potentially impacting their profit margins and stock prices.

The automotive industry, with integrated supply chains spanning the globe, would also witness disruptions. The Peterson Institute for International Economics estimates that a 25% tariff on auto imports could lead to a decline in global trade by US$600 billion, impacting manufacturers, suppliers and consumers worldwide.

Volatility in financial markets

The mere mention of tariffs exceeding 60% has the potential to trigger heightened volatility in financial markets. Historically, tariff announcements and trade tensions have led to significant market fluctuations.

A report by JPMorgan Chase indicates that elevated trade-policy uncertainty has a direct correlation with increased market volatility, affecting investor confidence and portfolio performance.

The CBOE Volatility Index (VIX), commonly known as the “fear gauge,” tends to surge during periods of