Trump’s Bold Moves on Trade and Foreign Relations

The U.S. President’s whirlwind blitz through the
bureaucracy, economic policy and geopolitical affairs isn’t slowing down. Trump
threatened potential tariffs of around 25% on automobile, semiconductor and
pharmaceutical imports. This development added to an already fragile market
outlook this week, amid cautious optimism for an end to the conflict in Ukraine
— a topic Trump also weighed in on.

On Tuesday night, the President stated he plans to impose
25% tariffs on imported cars, drugs, and chips. The auto industry will be first
to feel the impact, with the new tax charges set to take effect on April 2, the
day after Trump’s administration is expected to present reports outlining
tariff options.

A 25% tariff on imported cars could disrupt the already
struggling global auto industry. Trump has long criticized what he considers
unfair treatment of U.S. auto exports in foreign markets. The European Union,
for example, imposes a 10% tariff on imported vehicles — four times higher than
the 2.5% U.S. tariff on passenger cars.

Tariffs on pharmaceutical drugs and semiconductor chips
would also start at “25% or higher”, substantially increasing further
over the next year. However, Trump did not specify when these tariffs would be
formally announced, adding that he wants to give drugmakers and chipmakers some
time to establish production facilities in the United States to avoid the
levies.

Trump also hinted at upcoming announcements from the
world’s largest companies regarding new investments in the United States,
though he did not offer further details.

Beyond their immediate impact on specific industries, these
steep tariffs could have far-reaching consequences, potentially driving up
prices for consumers and increasing costs for businesses.

Meanwhile, Trump has initiated U.S.-Russia
negotiations, marking a potential shift in diplomatic relations. On
Tuesday, senior officials from both countries took steps toward a major reset,
agreeing to collaborate on ending the conflict in Ukraine, increasing financial
investment, and restoring diplomatic ties. The meeting was a striking display
of bonhomie after three years of American efforts to isolate Moscow.

In financial markets, the SPX reached its first record high of the
year, rising 0.2% and pushing its total market cap past $51 trillion. The
Nasdaq Composite and Dow Jones
index posted smaller gains, each rising by less than 0.1%.

The late-session rally was driven by investors increasing
their bets on utilities, financials and energy companies. Among the S&P
500’s eleven sectors, only three closed in negative territory, while the energy
sector led the gains, surging more than 1.4%.

Looking ahead, the Federal Reserve is set to release its
latest meeting minutes today. Three weeks ago, Fed Chair Jay Powell reaffirmed
that interest rates would remain unchanged, emphasizing a “wait-and-see”
approach as officials assess the economic
impact of Trump’s policies.

The minutes will offer insight into the Fed’s stance on
potential future interest rate cuts, inflation expectations and the broader
economic implications of the proposed tariffs.

This article was written by FL Contributors at www.forexlive.com.