Over the weekend, president Trump signed executive orders imposing tariffs on imports from Canada, Mexico and China, and although there is a pause on the implementation of the Mexico and Canada tariffs, it is almost certain that some form of tariffs will be implemented.
For now, the EU has not been included but Trump has indicated that the EU – with its huge trade surplus with the US – is likely to face tariffs. Indeed, as Rabobank's Michael Every writes this morning, "those thinking tariffs are not a thing need to consider that Europe is likely next in the firing line – and it doesn’t have a fentanyl issue or a common border with the US (yet). What is the potential deal there?"
So as markets contemplate these and other questions, Goldman strategists revisit some key points and charts on European equities' sensitivity to renewed trade risks. In other words, what the coming trade war would looks like.
