ECHOES OF SMOOT-HAWLEY IN TRUMP'S TRADE WAR

Trump's recent tariffs and the Smoot-Hawley Tariff Act of 1930, which worsened the Great Depression by triggering retaliatory tariffs and a collapse in global trade. It highlights how history seems to be repeating itself with similar economic and geopolitical consequences unfolding today.

- Ruchira Talapatra

Global trade is facing renewed uncertainty due to United States President Donald Trump's potential imposition of new tariffs. Market experts predict increased volatility in global financial markets as investors closely monitor developments in trade negotiations and geopolitical tensions. Reports of a possible delay in the new tariffs helped stabilize financial markets recently, but concerns remain about the long-term impact on global trade flows.

Analysts anticipate that fresh tariff updates could influence the movement of the US dollar and crude oil prices, adding to market instability. Sectors sensitive to interest rates, such as consumer goods and metals, are expected to be particularly vulnerable. The slowdown in global mergers and acquisitions (M&A) activity and private equity fundraising is also linked to tariff-related uncertainty, reflecting a cautious outlook among investors.

Meanwhile, Indian solar manufacturers face risks from a potential rollback of the US's Inflation Reduction Act, which could weaken demand for solar panels and impact export margins. However, reduced US capacity could create opportunities for Indian producers to expand their market share.

The ongoing uncertainty surrounding tariffs is expected to keep investor sentiment cautious, with defensive sectors and large caps likely to outperform soon. Discussing global trade is particularly important at this moment due to escalating tensions and policy shifts that have significant implications for the global economy.

TRUMP'S LATEST TARIFFS AND GLOBAL RESPONSE