Trump seeking economic deal with China as fresh trade talks loom- WSJ
BCA Research provided insights into the strategic objectives of the current U.S. administration, noting a significant shift from the previous term under President Trump.
The firm indicated that the administration is now focused on achieving strategic goals, including a substantial upgrade to the U.S. industrial base, which is central to Trump 2.0’s objectives. This focus on re-industrialization could necessitate the implementation of import tariffs, currency depreciation, or a combination of both strategies.
According to BCA, the prospect of U.S. tariff threats is expected to result in another near-term appreciation of the US dollar. The analysis suggests that such tariffs would have a more negative impact on the currencies of US trading partners than on the greenback itself.
Looking beyond the immediate future, BCA anticipates that within the next three months, the U.S. dollar might reach a significant peak, as previously discussed in their Bessenomics series.
The research also touched on recent trends in global trade and manufacturing activity, which may have been bolstered by anticipatory actions ahead of potential tariffs. However, BCA predicts this activity will encounter challenges in the latter half of the year.
Furthermore, the firm expressed skepticism about the sustainability of the resilience shown by European and Chinese stock markets amid a U.S. equity selloff.
BCA expects that as U.S. demand—a key driver of global growth over the past two years—declines and tariffs take effect, the economies tied to these markets will experience deterioration.
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