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Less than one week since taking office, US President Donald Trump has already kept one of his key election promises: signing an executive order revoking US membership in the historic Trans Pacific Partnership (TPP) agreement. Will the move positively or negatively impact the American, global and Israel market?
Capital markets expert Haim Toledano expects increased uncertainty in the markets as a result of the move. "We are witnessing one of Trump's first moves as president, without doubt, directly keeping with his campaign promises, whereby the haste in which the events are taking place is pressuring the markets, increasing volatility. There is no question that this is not good news and the markets will become extremely risky in the near future."
Trump's decision increases market volatility | Photo: fotolia
We see here the opening shot in what might evolve into a trade war. As in any war, it is difficult to know how things will develop and it is too early to assess whether a new arrangement will be reached or whether there will be a serious deterioration in which the victims of the cancellation of the agreement respond with countermeasures on American trade.
In a best case scenario, Trum's change will work, and jobs will return to the American market, factories will begin manufacturing once again in the US and American will successfully sell cars, technology and financial services while reducing regulation outside the borders of the US. Financial institutions that have been on the defense in recent years can begin capturing the global financial market, and car manufacturers such as Chevrolet can begin driving the streets of Berlin more than German BMWs. This may be a success of what the market calls Trumpism.
In a worst case scenario, the US inflation will be coupled with recession. This process will occur due to increased cost of products imported in the US as a result of trade wars, along with global unwillingness to cooperate with Trump's plans, and the desire of other companies to exact a price from the Americans. There is no guarantee that American companies will manufacture if they have no buyers and these companies need a consumer audience.
Haim Toledano is an online capital market trading expert
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