Donald Trump’s rise in the midst of the U.S. presidential race is raising questions about the possibility of a second term for the Republican candidate. One voice expressing concerns about Trump’s economic policies is Dr. Doom, who warns that his approach could lead to a “trade war.”
Nouriel Roubini, widely known as Dr. Doom, suggests that a second term for Trump could trigger significant conflict in the trade of goods and services, which would simultaneously impact prices and stock markets.
Professional and critical journalism is a fundamental pillar of democracy, which often irritates those who believe they possess the absolute truth.
Roubini’s warning about Trump’s policies highlights that the Republican candidate’s plan may involve imposing tariffs on all imports entering the U.S., starting at 10%. Tariffs on imports from China could soar to 60%, further straining trade relations with the Asian power.
The economist, who had accurately predicted the 2008 financial and housing crisis two years beforehand, believes this approach would provoke retaliation from other nations, leading to dire consequences for investors. He stated in an interview with Bloomberg, “I would say that protectionism will lead to a gradual increase in inflation, which will certainly be concerning for the bond market.” He added, “A global trade war won’t be beneficial for the stock market.”
Despite these warnings, the finance expert noted that Trump might implement a negotiation strategy by offering “carrots and sticks.” This could include lowering or eliminating tariffs for NATO allies if they commit to increasing their defense spending.
After weeks of speculation and criticism from various sides, Joe Biden has decided not to run for re-election. He has endorsed his vice president, Kamala Harris, to take his place as the Democratic candidate. In his resignation letter, Biden explained that while he intended to seek re-election, he believes it is best for both his party and the country to step back and focus solely on fulfilling his presidential duties for the remainder of his term.
With Biden’s decision, Harris now has a clear path to continue in the electoral race. However, she will need to wait until early August to secure the official endorsement from the Democratic Party.
Meanwhile, Cohen Aliados Financieros noted that “the markets reacted positively to Biden’s withdrawal from the presidential race and his backing of Kamala Harris as the Democratic nominee.” They remarked that although polls still favor Trump, the chances for the current administration have improved. This change has dampened the momentum of the “Trump trade,” which had recently shone due to a shift towards value companies benefiting from policies favoring higher tariffs, lower taxes, and deregulation.
An analysis from Portfolio Personal Inversiones (PPI) indicates that markets “appear to doubt anyone’s ability to compete” with the billionaire businessman, as he leads in the few surveys available, and his name carries significant weight.
Moreover, the report suggests that the assassination attempt on the former president may politically benefit him. If that were not the case, gold prices should be rising and the dollar strengthening, given that a candidate other than Trump would likely have fewer incentives to devalue the currency.
Lastly, the PPI report highlighted that betting houses are showing an increased likelihood of Harris winning, rising from 27% on Friday to 39% today (Monday). However, the prevailing scenario still points to Trump as the likely future president, with a 60% probability. This explains, in part, the moderate reaction of assets to this evolving political situation.
Source: https://www.perfil.com/noticias/economia/el-dr-catastrofe-advirtio-que-el-proteccionismo-de-trump-podria-derivar-en-una-guerra-comercial.phtml
