- The escalating tariff war poses significant uncertainties for the global trade outlook in the medium term. SATS, due to its significant 50%/25% revenue exposure to the global/US air cargo handling business, is poised to be negatively impacted by a potential setback in globalisation and decline in global trade volume.
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Tariff war initiated by the US.
- Last week, US president Donald Trump announced a series of sweeping tariffs aimed at addressing the US’ large trade deficits. Dubbed “Liberation Day”, the initiative introduced a tariff structure that exerts additional tariff rates of 10-49% on its major trading partners.
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Reponses by trading partners.
- China swiftly responded with retaliatory tariffs of 34% on all imports from the US, as well as export controls to restrict exports of critical rare earth elements to the US.
- The EU has decided to prioritise negotiation over retaliation, though it has prepared an initial set of targeted countermeasures.
- Most of the other trading partners (including many Asian countries) have decided not to retaliate and signalled their wiliness to negotiate with the US.
- Trump threatened that if China does not withdraw the 34% retaliation tariff on the US by 8 Apr 25, he will impose another 50% tariffs on China. This is expected to happen as China has vowed to fight to the end.
Tariff war posing significant uncertainties to global trade.
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