Dear Traders, Investors and every interested person
I dont going to lie Im trough hard weeks maybe months after Trump became president although I’m sure you too. As of 01/04/2025 we are just few hours away to enjoy our rollercoaster ride in the amusement park of the USA GOVERMENT. Their old-new attractions is about tariffs and reciprocal tariffs.
Those who’s are not familiar what is a tariff I recommend reading this part those, whose already going to the bed and waking up with it may skip it the following section.
A **tariff** is a **tax imposed by a government on imported or exported goods**. It's one of the tools countries use in international trade policy. Here's a breakdown:
Types of Tariffs:
1. Import Tariff – tax on goods coming **into** a country. ( We are dealing with this curently)
2. **Export Tariff** – tax on goods going **out** of a country (less common).
Why Governments Use Tariffs:
- Protect domestic industries by making foreign products more expensive.
- Generate revenue for the government.
- -Retaliate against unfair trade practices or tariffs from other countries.
Example:
If the U.S. places a **20% tariff** on imported French wine, that means any French wine imported into the U.S. will have an additional 20% tax added to its price. This makes domestic wine relatively cheaper, helping local producers compete.
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As of April 1, 2025, President Donald Trump has implemented or announced tariffs affecting a wide range of goods from multiple countries. Here's a summary of the current tariff measures
Tariffs on Canada and Mexico
February 1, 2025: President Trump signed executive orders imposing a 25% tariff on all goods imported from Canada and Mexico, citing concerns over illegal immigration and drug trafficking.
-March 4, 2025: These tariffs took effect, leading to retaliatory measures from both countries.
April 2, 2025: Tariffs on USMCA-compliant goods from Canada and Mexico, which had been temporarily exempted, are set to be enforced.
Tariffs on China
-February 1, 2025: An additional 10% tariff was imposed on imports from China due to the country's alleged failure to curb the export of fentanyl precursors and address money laundering activities.
March 4, 2025: The tariff rate on Chinese imports was increased to 20%
Global Tariffs - COMMING
April 2, 2025 President Trump has declared this date as "Liberation Day," marking the implementation of new tariffs aimed at addressing trade imbalances.
- Reciprocal Tariffs The administration plans to enforce tariffs that match the rates other countries impose on U.S. goods, effectively applying a **20% tariff** on most imports.
- Automobile Imports: A specific 25% tariff on imported passenger vehicles, light trucks, and key automobile parts is set to take effect on April 3, 2025.
Tariffs on the European Union- Because we treated very badly.....
-February 26, 2025: President Trump announced plans to impose a 25% tariff on goods imported from the European Union, with a particular focus on the automotive sector.
Secondary Tariffs on Oil Imports
March 2025: The administration has threatened secondary tariffs on countries importing oil from Russia and Iran. This means that nations purchasing oil from these countries could face U.S. tariffs if they continue such trade while also engaging with the American market.
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In case of you get lost between the dates please take look at the
Comprehensive Tariff Table – President Trump (2025)
as of 01/04/2025
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Hereafter I would like turn your attention to the period of 28/02/2025 - 19/03/2025
What caused this relentless and, for many traders, painful +5.35% upside move under 19 days?
🇩🇪 Germany has unveiled a comprehensive fiscal strategy involving substantial investments in both infrastructure and defense sectors over the next decade. Here's a breakdown of the planned expenditures:
Infrastructure Investment:
€500 Billion Special Fund: The government has established a €500 billion special fund dedicated to infrastructure and climate-related projects over a 12-year period. This fund is designed to modernize critical systems, including energy grids, transport networks, digital infrastructure, education, and healthcare facilities. Notably, €100 billion of this fund is earmarked specifically for climate action initiatives aimed at achieving carbon neutrality by 2045.
Defense Spending:
Exemption from Debt Brake: In a significant policy shift, Germany has amended its constitutional "debt brake" to exempt defense and security expenditures exceeding 1% of GDP from borrowing limits. This adjustment effectively removes the previous cap on defense spending, allowing for increased investments in military capabilities.
Projected Defense Expenditure: While exact figures may vary based on annual GDP and specific defense needs, this exemption is anticipated to facilitate approximately €400 billion in additional defense spending over the next 10 years.
This fiscal policy measures does not take place often, but honestly signs were on the market that something is cooking at the back: Someone knows something that I dont. And you neither.
DAX from 01/January/2025 was not too much reason for the steady increase in the shadow of the trade war. 
EURUSD just look at the price actions from 01/January/2025 till the German gov announcement. I could not explained for myself fundamentally what is happening. Why I see huge positioning with towards the upside when we still facing measures which can push major economies in the EURO AREA as France and Germany more deeper under the water where they already been.... No economic data refuted my findings.
Anyway, after all I said to myself let’s wait meanwhile, I was shorting the EUR because I felt the possible damage of the planned measures are not correctly priced in. (Interest rate parity, industrial production under 50 ( which means contraction) and a few other things. )
03/03/2025 Thats when everything got sense. Lesson learned: If you feel something do not suppress it especially when the signs are that strongs as above mentioned period.
The effect: All Europen goverment bond yields skyrocketed
DE10 
FR10 Why ? The German plans means that the goverment needs money and market said well i need return so I will finance you +3% and 2,30%
Bonds market are the real drivers behind the currency movements and this case the effect was drastic. In order to buy eur denominated bonds you need euro, therefore you exchange your currency to euro.
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Tomorrow questions is whats will be new in terms of tarrifs?
I do expect that soon the inflation will edge higher in the US which can trigger US bonds yield to increase significantly, but is will lead for short term dollar gain.
USA is playing with the fire since if their avarage debt interest payments will be +5% thats will open darker boxes soon than in 2008. Much darker.
So thats why I would enjoy the short term currency gain which is autonomous and than exchange my dollar to euro everywhere.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.