The trade war has begun, the battle over Ukraine defences continues.

Wednesday 5th March 2025

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It has been an alarming 24 hours. The US has applied tariffs on Mexico and Canada, added to those already applied to China, and pulled funding for Ukraine’s war effort. Share markets have responded the world over, but not as much in the US as you might expect. NAB’s Ray Attrill says the response has been stronger in Europe, presumably on the realisation that Trump’s word should now be taken literally. The impact of a trade war -with China, Canada and Mexico all likely to retaliate, is obvious. Prices will rise and demand will fall. Markets have taken the inevitable economic slowdown as a reason for the Fed to cut more and sooner - but Ray thinks it’ll be hard to cut in such an inflationary environment. Meanwhile, the US President is forcing Europe to come together, with Germany announcing new defence spending and Europe allowing members to go beyond their fiscal limits for military spending.

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