.President Donald Trump announced that from April 3, 25 percent tariffs will be imposed on all cars produced outside the United States. The move is aimed at boosting domestic production, and U.S.-made cars will be exempt from the tariff.
Trump stressed that the policy would simplify the complex supply chain between the United States, Canada and Mexico and reduce U.S. debt. However, the decision provoked strong reactions internationally.
According to analysts, these policies are likely to lead to higher inflation, an issue that Trump promised to reduce.Ursula Fen der Leyen, president of the European Commission, described the move as "harmful to businesses and worse for consumers." Canadian Prime Minister Mark Carney has also voiced his opposition, promising to defend Canadian businesses and industries.
The new tariffs are part of Trump's plan to reform the global trade system. Also, he plans to impose mutual taxes on countries that impose high tariffs on American goods from April 2.
In general, tariffs, trade tensions and high taxes are all to the detriment of the consumer, leading investors to direct their liquidity to safe assets such as dollars or gold. This will increase downward pressure on the market and prevent price growth.
Also, if Trump's tariff policies increase inflation, the Fed will likely have to keep its interest rates at high levels for longer. Rising interest rates and liquidity flows towards secure assets will put the digital currency market in a bind.