DuckerFrontier’s global teams rely on scenario-based frameworks to prepare for changing, and often volatile, political and economic environments. Our analysts and practice leaders adapt their views in real-time as events unfold to ensure clients receive the most up-to-date and timely market monitoring insights.
On December 2, President Trump imposed new tariffs on industrial metals (steel and aluminum) from Brazil and Argentina. This resulted from an accusation that both countries have manipulated and devalued their currencies, which Trump believes is hurting US farmers and the economy.
Shortly after this announcement, the administration also threatened France with tariffs on $2.4 billion in imports of popular French products. This came in response to a digital tax passed earlier this year seen as targeted at American tech companies. These latest announcements from the Trump administration have opened the possibility of a new trade war front in 2020.
This week, Trump imposed tariffs on Brazil and Argentina, threatened tariffs on France, and stated that a US-China deal may not come before the November 2020 election. But so far, these moves are symbolic – designed to bolster Trump’s credentials as a trade warrior while not putting pressure on the US economy. The next important signpost are the tariffs on China, scheduled for mid-December. – Ryan Connelly, Practice Leader
However, DuckerFrontier does not expect the reinstatement of these US tariffs on Brazil and Argentina to have a significant macroeconomic impact. Senior Analyst Alex Schober states in Clarín, “Steel and aluminum exports from Argentina to the United States constitute less than 1% of all Argentine exports. More than anything, it seems to me that it is a Trump electoral strategy because “phase one” of a commercial truce between the US and China is now negotiated. That is, Trump does not want to pressure China right now.” However, further FX risks from this measure should not be ruled out as well as potential escalations of US demands in other areas, including relations with China.
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