WISHFUL THINKING
By Daniel Johnson
By Daniel Johnson
December 13, 2024
BNNBLOOMBERG
U.S. President-elect Donald Trump’s tariff policy is unlikely to focus on Canada, according to one FX strategist, who says investors shouldn’t rule out the potential risks, but she’s optimistic Canada will be shielded from a worst-case scenario.
On his first day as president, Trump has threatened to implement across-the-board 25 per cent tariffs on imports from both Canada and Mexico, unless both nations address issues related to the U.S. border and crack down on fentanyl and illegal migration into the U.S., Bloomberg News reported.
In response, Prime Minister Justin Trudeau said tariffs of that nature would be “devastating for the Canadian economy,” while saying Canada would “respond” if Trump follows through on his threats.
“Our house view is that Canada will not be in the first line of fire. We think that the primary target as soon as Trump takes office will definitely be on China and the Euro area,” Jayati Bharadwaj, a global FX strategist at TD Securities, said in an interview with BNN Bloomberg Friday.
“China, we have precedents from Trump’s first term of him imposing tariffs. I think that’s a very clear sign that he’s going to do that.”
She added that he is also unlikely to “be an ally to the Euro area” in his second term as U.S. president. Given Canada’s membership in the United States-Mexico-Canada Agreement (USMCA) agreement, Bharadwaj said she thinks Canada could be shielded from the “first line of attack” from Trump.
However, she added that you cannot rule out the risks associated with the proposed tariffs.
“I would not rule that out as a risk, but I would say that’s not the first risk that should be front of mind for investors. But that’s definitely a second order risk which you cannot rule out,” Bharadwaj said.
U.S. President-elect Donald Trump’s tariff policy is unlikely to focus on Canada, according to one FX strategist, who says investors shouldn’t rule out the potential risks, but she’s optimistic Canada will be shielded from a worst-case scenario.
On his first day as president, Trump has threatened to implement across-the-board 25 per cent tariffs on imports from both Canada and Mexico, unless both nations address issues related to the U.S. border and crack down on fentanyl and illegal migration into the U.S., Bloomberg News reported.
In response, Prime Minister Justin Trudeau said tariffs of that nature would be “devastating for the Canadian economy,” while saying Canada would “respond” if Trump follows through on his threats.
“Our house view is that Canada will not be in the first line of fire. We think that the primary target as soon as Trump takes office will definitely be on China and the Euro area,” Jayati Bharadwaj, a global FX strategist at TD Securities, said in an interview with BNN Bloomberg Friday.
“China, we have precedents from Trump’s first term of him imposing tariffs. I think that’s a very clear sign that he’s going to do that.”
She added that he is also unlikely to “be an ally to the Euro area” in his second term as U.S. president. Given Canada’s membership in the United States-Mexico-Canada Agreement (USMCA) agreement, Bharadwaj said she thinks Canada could be shielded from the “first line of attack” from Trump.
However, she added that you cannot rule out the risks associated with the proposed tariffs.
“I would not rule that out as a risk, but I would say that’s not the first risk that should be front of mind for investors. But that’s definitely a second order risk which you cannot rule out,” Bharadwaj said.
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