This week markets have been rattled by a further escalation in Donald Trump’s trade war, when he opened a new front with Mexico. Despite renegotiating the NAFTA agreement more to his liking, he has now threatened to impose tariffs unless Mexico does something to stem the flow of immigrants crossing the Southern border. This comes in the same week that the confrontation with China spilled over into diplomatic channels, with the UK taking fire for defying American orders not to work with Chinese telecoms firm Huawei.
Since the trade negotiations fell apart and the trade war restarted on the 5th May, the S&P 500 is down around 5%. This suggests that while the increasing hostilities are gaining a lot of press coverage, they’re not troubling investors too much for now. This is probably because no-one is taking it seriously and expects it all to blow over. That feels too optimistic to us, we wouldn’t be surprised to see this drag on another 12 months, before a big truce is declared just before the presidential elections next November.
Read what the team at FE consider to be significant over the current week.