As if the US – China trade war tensions hadn’t given markets enough to worry about, the Trump administration has pulled another player into the mix, announcing this week that it will now also impose new tariffs on certain EU goods imported to the US.
The US filed a complaint with the World Trade Organisation in 2004 which claimed that loans to Airbus were state subsidies. While the US won that battle, it complained that a number of EU countries still weren’t complying. America sought to impose taxes on $11 billion of goods. The World Trade Organisation denied that but this week approved $7.5 billion of tariffs.
This decision means that from later this month, the US will begin to impose taxes on goods including aircrafts and agricultural products such as olives and cheese. The EU says if that is the case, it will retaliate in kind, setting the stage for another trade war.
The EU and the US are both currently facing struggling economies, with the US’s poor service sector data also lining up with lacklustre manufacturing data. The EU has similar troubles.
News of the trade war is likely to compound existing stock market fears of recession, making gold an ever-more attractive safe haven asset. Buy now to take full advantage.