To be sure, everyone will be focused on the magnitude of the tariff increase and its incidence – which countries will be hit and by how much.
As we argued last week, the broader the tariffs, the more negative the effect is likely to be on the US (less scope for re-direction of trade and greater inflation pass-through) and by extension US risk assets, recession probabilities and ultimately the USD.
Yet all this being said, George Saravelos, Global Head of FX Research at Deutsche Bank, is not convinced of a sustained market reaction, especially with regards to the USD.
