Trump expands tariffs, escalating economic risk: deVere CEO

Investing.com -- President Donald Trump has made tariffs a key part of his presidency, with a significant move to impose 25% duties on all steel and aluminum imports, according to Nigel Green, CEO of global financial advisory deVere Group. This move marks a major escalation in economic risk.

Green warns that, in an effort to fund tax cuts, Trump is aggressively using tariffs as a source of revenue. The reintroduction of these trade barriers is now a permanent feature of Trump’s presidency, creating a destabilizing force in the global economy.

Trump confirmed that more reciprocal tariffs will be introduced soon, targeting all trade partners and matching each nation’s levies on US goods. This move is expected to increase trade tensions and add to global economic uncertainty.

Green points out that the White House is in need of cash due to the colossal tax cuts that were implemented without sufficient funding. This has resulted in a spiraling deficit, forcing the administration to use tariffs as a revenue tool.

This move aligns with previous warnings from deVere about potential disruptions in the bond market. The escalating trade war could cause a sharp increase in yields as investors demand greater risk compensation. This could lead to a surge in borrowing costs, affecting equities and causing disruptions in financial markets.

Past experiences show that protectionist policies of this magnitude have negative effects. During Trump’s first term, when tariffs were imposed, supply chains were disrupted, corporate earnings were affected, and retaliatory measures from trading partners caused further economic strain. The current situation poses even greater risks as global markets are already dealing with inflationary pressures and uncertainty in monetary policy.

Green believes that the timing of these tariffs is deliberate. Trump may be anticipating short-term economic pain to set the stage for himself to appear as the savior later. This pattern of creating a crisis and then intervening to resolve it seems to be a recurring strategy.

For investors, the implications are clear: extreme volatility is now inevitable. Markets are expected to experience violent swings across stocks, currencies, and bonds due to erratic policy shifts. The risk of a broader global slowdown is also increasing, with businesses likely to delay investments due to uncertainty, and a potential weakening in consumer sentiment.

Currency markets are already reacting to these changes. The future of the dollar is uncertain, as protectionist measures often lead to distortions in exchange rates. Emerging markets, which are highly sensitive to changes in trade policy, are particularly at risk.

Green emphasizes that investors should not underestimate the risks ahead. He believes that political unpredictability will directly impact market movements and that the Trump administration will continue to use trade as a weapon.

Green urges investors to take decisive action to mitigate risks and seize opportunities. He suggests that active management, diversification, and a global approach are critical for optimal outcomes in the current environment.

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