Since his first term, Donald Trump has ignited trade disputes, and his new administration has intensified these measures even further. With the implementation of widespread tariffs and frequent announcements via executive orders or social media, Trump has significantly increased tariffs on various countries. From a market perspective, his negotiations primarily aim to achieve two objectives: increasing U.S. fiscal revenue and driving industrial reshoring to boost U.S. manufacturing productivity and exports. Of course, there are also other underlying motives behind his actions.
Trump employs diplomatic and tariff pressure as negotiation tactics, restricting foreign products from entering the U.S. market. Recently, we have seen him use trade talks to push Canada, Mexico, and other countries to adjust their border management policies. Additionally, there are reports that he has demanded foreign currencies to appreciate or required other countries to purchase U.S. energy. These negotiations have led to significant asset volatility, creating trading opportunities for investors based on the negotiation timeline, objectives, and impacts.
Trading Opportunities Amid Trump’s Tariff Disputes
1. Gold: Supported by Risk-Aversion Sentiment
Market uncertainty surrounding Trump’s trade policies tends to drive risk-aversion sentiment, which in turn supports gold prices. Investors should monitor opportunities where heightened risk sentiment pushes gold prices higher.
2. Non-U.S. Currencies: Potential Decline Before Rebound
Escalating trade disputes tend to pressure stock markets, while the withdrawal of related trade policies often restores market confidence and provides support to equities.
4. Oil Prices: Increased Downward Pressure
With Trump’s return, market dynamics have shifted from being driven by past economic data and central bank policies to being influenced by Trump’s policies and global geopolitical maneuvers. A significant portion of market activity may now occur during U.S. trading hours. Investors should closely monitor Trump’s latest announcements and those from his administration. However, trading strategies should primarily focus on the short term, as Trump’s unpredictability and aggressive negotiation tactics often mean that market trends only sustain for a single U.S. trading session.
Trump employs diplomatic and tariff pressure as negotiation tactics, restricting foreign products from entering the U.S. market. Recently, we have seen him use trade talks to push Canada, Mexico, and other countries to adjust their border management policies. Additionally, there are reports that he has demanded foreign currencies to appreciate or required other countries to purchase U.S. energy. These negotiations have led to significant asset volatility, creating trading opportunities for investors based on the negotiation timeline, objectives, and impacts.
Trading Opportunities Amid Trump’s Tariff Disputes
1. Gold: Supported by Risk-Aversion Sentiment
Market uncertainty surrounding Trump’s trade policies tends to drive risk-aversion sentiment, which in turn supports gold prices. Investors should monitor opportunities where heightened risk sentiment pushes gold prices higher.
2. Non-U.S. Currencies: Potential Decline Before Rebound
- Pressure During the Initial Phase: When Trump announces new tariffs on a foreign country, that country's currency typically faces significant pressure.
- Rebound in Later Stages: Trump has expressed intentions to force foreign currencies to appreciate. If trade negotiations lead to agreements, non-U.S. currencies may experience a rebound.
Escalating trade disputes tend to pressure stock markets, while the withdrawal of related trade policies often restores market confidence and provides support to equities.
4. Oil Prices: Increased Downward Pressure
- Short-Term Volatility: U.S. tariffs on imported energy products may provide short-term support for oil prices, but once tariffs are lifted, prices could decline under pressure.
- Long-Term Supply Increase Impact: Since his election campaigns, Trump has advocated for increased U.S. energy production. Trade negotiations may also require other nations to purchase more U.S. energy, potentially leading to an increase in U.S. energy output. In the long run, this could gradually suppress oil prices.
With Trump’s return, market dynamics have shifted from being driven by past economic data and central bank policies to being influenced by Trump’s policies and global geopolitical maneuvers. A significant portion of market activity may now occur during U.S. trading hours. Investors should closely monitor Trump’s latest announcements and those from his administration. However, trading strategies should primarily focus on the short term, as Trump’s unpredictability and aggressive negotiation tactics often mean that market trends only sustain for a single U.S. trading session.
