Donald Trump Plans Major Tariff Increases Amid Economic Uncertainty

The UK's and Europe's stock markets fell on Wednesday, November 6, 2024, following Donald Trump's election victory while Wall Street experienced a surge. The FTSE 100, London's primary index, closed 0.07% lower amid concerns over market volatility, while the German Dax decreased by 1.1% and the French Cac 40 fell 0.5%. Investor confidence dropped as worries about inflation and tax cuts surfaced, leading to increased Treasury yields and impacting UK housebuilders. Market reactions indicated fears related to Trump's policies, particularly concerning inflationary pressures that could accelerate the US deficit. The American dollar strengthened, reflecting expectations that Trump's presidency would lead to higher tariffs on imports, subsequently elevating inflation and maintaining elevated interest rates. Samuel Tombs, chief US economist for Pantheon Macroeconomics, revised upwards his inflation forecast for the US due to the expected introduction of tariffs. The economic implications for the UK are significant, with predictions of slowed growth, highlighting the country as one of the most affected by the proposed tariff changes. The National Institute of Economic and Social Research (NIESR) forecasts growth rates decreasing from 1.2% to 0.4% by the year 2025 due to these potential economic shocks. With Trump's presidency signaling major shifts in US trade policy, global markets are bracing for possible strife. As traders reassess the political landscape, the apprehensions regarding the economic ramifications of Trump's victory are expected to persist, leading to uncertain trading environments across both sides of the Atlantic.