Marc Ostwald, Chief Economist & Global Strategist at ADM ISI, spoke to CGTN Europe about the global market's response to Trump’s tariffs.
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00:00Now as Donald Trump suspends some of his tariffs, let's take a look at how European stock markets
00:05are reacting. In Germany, the DAX is up very slightly 0.2%. In the United Kingdom, the FTSE
00:13is 0.4% higher. And in the broader market, the stock 600 ended in modestly positive territory.
00:22So how are the latest developments in the trade war likely to be received by investors
00:27in the United States? Mark Oswald is Chief Economist and Global Strategist at ADM Investor
00:33Services International and joins us now. Hello, Mark. We're seeing quite a muted response
00:39in Europe. We did see big reaction in the US initially. Has everything calmed down?
00:45Has it all been priced in? To a certain extent, I think markets are beginning to learn to
00:52not jump at every announcement, particularly given the to and fro that we had on the Colombia
00:59tariffs, the to and fro that we've got now on the Canadian and Mexican tariffs,
01:06a measured response from China in terms of retaliatory measures. There is a huge amount
01:15of uncertainty. And it's the real danger for markets is to become whipsawed at every announcement
01:26and or every suspension of tariffs for a short period. And markets are basically just getting
01:35back used to this modus operandi, which they had sort of to a certain extent unlearned over the
01:42past four years of the Biden administration. It doesn't mean that they've been desensitized,
01:48but it certainly means that there is a realization that jumping literally at every announcement
01:54is probably not a very good way to make an investment decision.
01:58Yeah, you spoke about uncertainty. If we look what's just happened within a 12 hour period
02:03around the US Postal Service, first of all, saying those small parcels coming from China
02:08that are normally exempt under this de minimis rule, which means anything under $800 doesn't
02:13get a tariff charge, those parcels are not going to be accepted. Now those parcels are,
02:18but it's not sure what's going to happen with the tariffs and when.
02:22What do you make of that? What is the signal that it's sending?
02:26Well, I think the most important thing for everybody to understand, particularly in terms
02:30of the US-China trade relationship, is the dialogue that is going to happen very soon
02:37between Mr. Trump and Mr. Xi is going to be key to all of this to see whether this becomes
02:44an escalated situation or not. I think the other thing that people also need to bear in mind
02:50strongly here is this is a very different situation to where we were during the first
02:56administration, because then Chinese exports to the US were about 28-29% of total Chinese exports.
03:05That's down to 18 now, and the emerging market part of it has gone from 28-38%.
03:12So there is, to a certain extent, less sensitivity on the Chinese side, but it's still a very
03:20sensitive relationship. Apple, of course, has got quite a strong presence in China. We're hearing
03:25now that China wants to look into the fees that Apple is charging. What do you make of that? Do
03:32you see that as all part of this twatat? It certainly is, and it's not only a case of China.
03:42The EU, as and when tariffs are slapped on the EU, as Mr. Trump has promised,
03:49will also look to go after the US tech sector, particularly as Mr. Trump has now abandoned
03:55or said that basically the US will not join the corporate tax agreement.
04:02So the digital services tax is definitely on the board. So the US tech sector, which everyone's
04:11heavily invested in, is obviously a very easy one to go after. What makes it more complicated,
04:20as we also have on top of all of that, is the investment that the US tech sector is making
04:27in AI really viable? Particularly, there was a very bad reaction to the Alphabet results yesterday
04:34after their vast increase in spending on AI. All right. Thank you so much for your time,
04:42Mark Oswald, Chief Economist and Global Strategist at ADM Investor Services.