Bitcoin price today: gains to $120k, near record high on U.S. regulatory cheer
Yesterday’s announcement by U.S. President Trump of proposed tariffs has taken a broader scope and imposed higher rates than anticipated, according to UBS. The new tariffs could increase the weighted average tariffs on U.S. imports to 24% from the current 2.5% by the end of 2024, reaching levels not seen since the 1920s.
UBS’s Global Strategy team believes these tariffs are not yet reflected in market prices and arrive amid an already decelerating economy. They predict that global equity valuations, which are considered high, could be affected and emerging market (EM) currencies may weaken against the U.S. dollar as EM growth slows.
UBS analysts highlight the potential impact on global trade flows and the growth-inflation mix in the U.S. and globally. They are awaiting responses from US trading partners, as the US has signaled it will respond with higher tariffs to any retaliatory measures.
Although the White House has outlined a path to lower tariffs for countries that act to reduce trade deficits and barriers, the introduction of a 10% minimum tariff and the overall tone of the policy suggest a return to lower tariff levels might not occur soon.
Emerging market equities appear vulnerable as they do not seem to have accounted for these risks. Approximately 13% of the MSCI Emerging Markets Index revenue comes from the U.S., and these exports now face an estimated 35% weighted average tariff. UBS cautions that the MSCI EM’s expected 2025 earnings per share growth of 17% could face downward revisions, especially given the macroeconomic risks outlined.
The firm also notes that EM price-to-earnings (PE) multiples are currently at the mid-point of their 10-year range, excluding the Covid period, and the PE discount of EM to developed markets (DM) is around historical averages.
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