The New US Tariff Regime: Trump, Early Results, and How Geopolitical Risk Affects Financial Assets
With some Southeast Asian countries being among the hardest hit by the new US tariffs (e.g., China and Vietnam being clear examples), as they affect Canada, much of the bilateral relationship was preserved. Nonetheless, the 25% tariffs on Canadian imports remain, along with the 10% on its energy exports, and the blanket tariff on all aluminum and steel.
So far, the CAD/USD trade is advancing, moved in large part by suggestions of renegotiations between the two countries over economic and securities matters following the April 28 vote in Canada, and via a Senate resolution, passed by a 51-48 vote tally with four Republicans and all Democrats in support, that seeks to end the president’s emergency declaration on fentanyl trafficking that underpins tariffs on Canada.
Geopolitical risk does affect the behavior of financial assets. And as I’ve said before, political and country risk analysis becomes ‘truly incomparable when it can be applied to the behavior and protection of assets.’
On this score, there is a solid literature on the extent to which political forces move currencies, with one very interesting piece that uses our ICRG data on political risk, published in The Journal of Financial and Quantitative Analysis. Significantly – and empirically – the study found that global political risk can capture most of the dispersion of currency momentum returns, thus making it a fundamental determinant of a momentum strategy in the foreign exchange market.
Have a look: (https://lnkd.in/eDMiXB73)
With over 7.5 million back tested risk points, appearing in over 1,000 published works, and independently back tested for accuracy and relevance, PRS’ data series continues to produce meaningful empirical findings, profitable asset allocations, and informed corporate planning and valuation.
No other geopolitical risk firm occupies this position in the industry.
Our clients know it.
Our data drives.
The PRS Group
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www.christophermckee.net
CHRISTOPHER MCKEE, PHD CHIEF EXECUTIVE
Christopher McKee is PRS’ CEO and Owner. An international political economist, global investor, entrepreneur, and author, Chris received his PhD from Queen’s University (Canada) and has been involved in the field of geopolitical risk, limited recourse financing, and private sector development for the past 25 years.
