What Australian investors should know about the global market effects of US tariffs

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What Australian investors should know about the global market effects of US tariffs

Equity markets also tanked, while oil prices spiked amid concerns over potential crude supply disruptions from the two largest US suppliers, Canada a

Equity markets also tanked, while oil prices spiked amid concerns over potential crude supply disruptions from the two largest US suppliers, Canada and Mexico.

However, gains were limited by the possibility of reduced fuel demand and Goldman Sachs analysts anticipate that the tariffs will have minimal short-term effects on global oil and gas prices.

Peter McGuire from XM told ausbiz, volatility is here to stay:

“I’m pretty sure President Trump wants cheaper oil to really bring that inflation number down. So that’s where his mind is, you know, increasing production all across the shale revolution taking it up about 3 million barrels a day. So that’s his first target for this year. And I just think it’s going to be volatile.”

Australia outlook

Treasurer Jim Chalmers said Australia would not be immune from escalating global trade tensions, but the government is confident it can navigate the changes.

Citi analysts believe Australia can remain fairly protected in any potential trade war, due to its deep political ties with the US and the fact it runs a trade deficit with America, shipping only 5% of total exports to the US.

“While a hit to global trade flows could cause incomes and GDP growth to decline marginally, natural shock absorbers such as the exchange rate and strong economic ties with the rest of the world will likely imply minimal economic impact for Australia. We also consider that a trade war could lead to a decrease in goods prices domestically if exporters in China look for alternative markets to the US.”

Still, investors are concerned about potential implications which sent shares like Fisher and Paykel Healthcare and luxury retailer Cettire sharply downwards during Monday’s trade.

Fisher and Paykel manufacture about 45% of its medical devices and systems in Mexico. The remainder is manufactured in its home base, New Zealand.

Fisher and Paykel Healthcare daily chart

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