GLOBAL MACRO
Source: MNI - Market News/Refinitiv
- His pro-growth policies have driven the US dollar higher with the USD BBDXY up 2.0% since November 5 to its highest level in a year, making a narrowing of the deficit more difficult if the move is sustained.
- While Trump promised a uniform tariff of 10-20% on all imports, China and Mexico were the focus. China could face 60% uniform tariffs and Mexico 25% with possibly 500% for cars. Chinese auto firms have been producing in Mexico to avoid protectionism.
- The US’ deficit with China since December 2020, end of Trump’s last term, has actually narrowed around $21bn but widened again this year. Whereas with Mexico it is $54bn and $13bn wider respectively.
- Mexico stands to lose significantly with 83% of 2023 goods imports going to the US worth around 6.8% of its GDP, but Trump has said it can avoid tariffs by controlling criminal and drug transits across the border.
- China is far less dependent with 15% of exports going to the US worth 2.8% of GDP but given slow growth there, it will want to avoid facing increased protectionism and is likely to retaliate with its own measures.
- The US deficit with the EU is almost $20bn wider YTD and over $45bn since December 2020. European officials are aware that the US will want to turn this trend around and European Commission President von der Leyen suggested to Trump that Europe could increase its imports of US LNG.
- The deficit with the Pacific Rim ex China widened over $20bn in 2024 to date. In Asia, Korea and Japan are most exposed with around 20% of exports going to the US.
2023 Exports to US %
Source: MNI - Market News/Refinitiv
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