CGTN Europe interviewed Marc Ostwald, Chief Economist & Global Strategist, ADM ISI
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00:00President Trump says any country that buys oil or gas from Venezuela will pay
00:05an additional 25% tariff on all trade with the United States. This so-called
00:10secondary tariff will take effect on the 2nd of April which Trump has described
00:14as Liberation Day. US stock markets are sharply higher on Monday but investors
00:19are still cautious before that tariff deadline next week. Well let's talk to
00:24Mark Oswald who's Chief Economist and Global Strategist at ADM Investor
00:27Services International. Good to see you back on the program Mark. So what do you
00:30make of this latest move on tariffs and President Trump? What's he hoping to
00:34achieve? It is basically putting maximum pressure on countries like Venezuela and
00:44Iran to basically try and basically make the life very uncomfortable for
00:54both regimes. It's another example of how trade tariffs are being used for
01:01purposes which are actually not really that much related to trade but more to
01:07geopolitical and other issues. It seems that something new comes out on tariffs
01:13and President Trump almost every day. He's again talked about this 2nd of
01:16April deadline, Liberation Day as he calls it. What's Wall Street making of
01:21all this? Well there is definitely some relief that it is going to be primarily
01:29reciprocal tariffs. It's going to be quite targeted rather than wholesale. So
01:35the worst fears that have been there are not for the time being, one should stress,
01:42being realized and that has provided some relief. I think there's also been,
01:48one has to be a little bit careful with a lot of the moves that we've seen in equity
01:52markets over the past month because some of it is, it's been reaction to tariffs but it's
02:00prompted rotation trades within the equity market above all out of the US into Europe
02:06on the back of the German government's moves to take infrastructure spending and
02:13defence spending out of the government debt break rule. But you get these rapid
02:20swings from one part of the market to another whether it's intra-sector or
02:28intra-continent or intra-country and then it's basically very sharp moves of the
02:35pendulum and you find a lot of people now today basically looking at the valuations
02:41in the tech sector in the US and saying they're too cheap and in Europe basically looking at
02:46Germany saying well all well and good but there are a lot of other constraints like
02:51German planning, like labour skills and production capacity which will present
03:00challenges to their plans and so you suddenly get a swing back in the pendulum in the opposite
03:06direction. So as you point out lots going on over and above tariffs. We have had this
03:10word flexibility come out in recent days so haven't we in connection with those. You
03:15talked about US markets, you talked a bit about European markets, what about Asian markets?
03:19How are they responding to what's going on? The Asian markets this morning were not really
03:27quite as enthused as the US markets. I think in part it's because within certain parts
03:36of the Asian markets there are countries, particularly the fragile five group which
03:43includes in Asia, India and Indonesia which run fairly large budget deficits and have
03:50substantial trade deficits and there is concern that in a heightened trade tension environment
03:58that they will suffer because a lot of their economies basically depend on exports. So
04:04yes, I think Asia at the moment is basically, it's benefited certainly from some of the
04:15swing away but it's now really waiting to see what exactly is going to, there's a lot
04:22of promise from China in terms of doing things but will that actually turn into increased
04:29trade or within Asia which should remain less vulnerable in theory because it's been
04:37growing for quite some time to all the tariff wars or will the vulnerabilities in terms
04:44of the exports that they have to the US, particularly in countries like Vietnam, actually create
04:55a lot of headwinds for trade. So it's a very finely balanced situation and I think really
05:02that's why Asian markets to some extent are taking stock. It is also, I should stress,
05:08not a unitary picture across Asia, it's really quite divergent at the moment.
05:12Well Mark, good to talk to you as always. Thank you for coming back on the programme.
05:15Mark Osford from ADM Investor Services International.