Strategic events, such as a historical shift in trade policy, will not be digested that quickly. It could take weeks and months and even quarters, before we have their full effects embedded.
Even if we were to get some sort of non-negotiable, permanent tariff level we would still have to deal with the uncertainty of retaliation and all the questions about how these will be passed on and how the potential revenue might be used to fund tax cuts or something else.
One thing I will say is that one of the main lessons from Trump 1.0 is that tariffs were more noise than signal and the trade that time was to buy tariff dips. That said, these tariffs threaten to be much larger and broader so I'd be cautious with that.
Aside from all of the implication, I think the market needs to focus on questions about US fiscal policy next. It's far from clear what's coming, how it will be paid for and if the votes to do any of it are there.
This article was written by Adam Button at www.forexlive.com. Read More Details
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