U.S. President Donald Trump postponed the introduction of a 25% tariff on Canada by one month, but analysts said it is not a situation that the securities industry can fully welcome. This is because increasing uncertainty may lead to greater volatility in the financial markets.
On the 4th, Park Sang-hyun, a researcher at iM Securities, said, "(President Trump) decided to delay the previously announced 25% tariff for a month after a conversation with the leaders of Mexico and Canada," adding that "although tariffs on China will be imposed as scheduled, there is also a possibility that this will be deferred with mutual agreement."
He noted, "The erratic tariff policy of Trump is likely to increase volatility in the financial markets for the time being," and added, "The likelihood of a destructive tariff policy being pursued has decreased, which is a positive signal for the financial markets."
President Trump announced plans to converse with China within 24 hours. The worst-case scenario regarding tariffs has been avoided. As the price of bitcoin, a risky asset, surged, the financial markets seem to have let out a sigh of relief.
Researcher Park analyzed that considering the last-minute dramatic resolution of tariffs on Colombia last month, along with the deferral of tariffs on Canada and Mexico this time, President Trump is actively using tariffs as a negotiation tool.
He further explained, "This shows that instead of a destructive tariff policy that could have a significant impact on the U.S. economy, tariffs are being utilized in a way that does not pose a major threat to the U.S. economy."
Researcher Park believes that Trump's current stance is closely related to the economic and industrial situation in the United States. He expressed concerns that while inflationary pressures are easing, the tariff policy could act as a renewed inflationary pressure.
The Chinese government is preparing to use the restoration of a trade agreement signed in early 2020 but not implemented as a negotiation card. It remains uncertain whether President Trump will accept it.
Researcher Park emphasized, "While we have avoided the worst-case scenario, the Trump tariff risk poses a significant possibility of causing instability in the financial markets at any time." He added, "Although he stated that negotiations with China would take place within 24 hours, if proper negotiations between the U.S. and Chinese leaders do not occur, there is a risk of a 10% tariff on China being implemented, along with an upward adjustment of tariff rates."