Finance consultancy warns of "chain reaction" from Trump trade war

And Canada’s construction steel body is urging caution from Ottawa

Finance consultancy warns of "chain reaction" from Trump trade war
Steve Randall

Investors are becoming increasingly concerned about the scale and potential impact of trade wars and protectionism.

The founder and chief executive of global financial consultancy deVere Group is among those warning of negative consequences of an escalation of the trade war, fuelled by President Trump’s ‘America First’ agenda, and including a new $200 billion package of tariffs on Chinese goods.

“Trump’s escalation of the trade war between the world’s two largest economies is going to trigger a chain reaction of negative events around the world,” commented Nigel Green. “It is going to lead to higher inflation in the US, as import tariffs raise the cost of imported goods while domestic producers find that they can increase their prices as foreign competition weakens.”

Green warns that price inflation and a rising greenback will prompt the Federal Reserve to raise interest rates, which then has an impact on emerging markets.

 “A stronger dollar also increases stress in emerging markets, many of which have borrowed heavily in recent years in dollars and who now find interest and capital repayments on these loans have shot up in local currency terms. In addition, emerging markets are particularly vulnerable to a downturn in exports resulting from a rise in quotas and import by the U.S, given that exports are a key driver of growth for many under-developed countries with China the most obvious example’.

Canadian steel body warns of construction impact
The trade war between the US and Canada which has seen tariffs imposed by both sides could damage Canadian construction if Ottawa also takes action against non-US steel importers.

That warning comes from the Canadian Coalition for Construction Steel which says that it supports the action taken by the Canadian government in retaliation against US tariffs but urges caution against extending restrictions to other producers.

"We support the federal government's measured response to the US tariffs and we understand the difficult choices the Government had to make in deciding which products to target," says Anoop Khosla, the Managing Director of Midvalley Rebar, a construction steel fabricator and Coalition member in Surrey, B.C. "However, we are worried that the Government is considering safeguard measures – some combination of tariffs or quotas – on imports of rebar and other construction steel from Canada's other trading partners."