Trump's Trade Offensive and Its Global Implications

The recent announcements by US President Donald Trump have significantly pressured the Asian stock markets on Friday. Trump unveiled new, comprehensive tariffs on Thursday, causing unrest in both European and global markets. These include, among others, 100% duties on branded drugs and 25% on heavy-duty trucks, which are to take effect from October 1. Other products such as kitchen furniture and upholstered furniture are also subject to high tariffs. It remains unclear whether these additional duties will be added to existing national tariffs or if economic areas with trade agreements, such as the EU, will be exempt from them. The existing agreements of the Trump administration with Japan, the EU, and the United Kingdom set caps on certain products that likely will not exceed the agreed rates. Meanwhile, pharmaceutical manufacturers worldwide are taking preventive measures to secure their production in the US and increase domestic inventory levels. The new tariffs on branded or patented pharmaceutical products apply to all imports unless the company has already started building a production facility in the US, according to Trump. Furthermore, companies like Paccar's Peterbilt and Kenworth, as well as Daimler Trucks' Freightliner, could benefit from the tariffs on heavy-duty trucks. The Asian markets responded with significant price losses among pharmaceutical manufacturers, while an index of Chinese furniture manufacturers fell by over 1%. Globally, stocks had already been troubled by declining expectations of US rate cuts, following recent data underscoring the resilience of the American economy. The Federal Reserve has so far been cautious about further rate cuts, as tariffs could fuel inflation. However, the new central banker Stephen Miran still argued for significant rate cuts to prevent a downturn in the labor market. Investors expect further insights into the US economy with the release of the PCE data, anticipated on Friday. Forecasts suggest an increase in the core PCE price index by 0.2% in August, compared to a rise of 0.3% in July.