Donald Trump tense the rope with tariffs, but opens a truce: what will the Fed do and how can Argentina affect?

Donald Trump tense the rope with tariffs, but opens a truce: what will the Fed do and how can Argentina affect?

The debate on the Convenience of applying protectionist measures divides economists. Although Trump identifies with a classical capitalist model, his rhetoric under the motto “Make America Great Again” reveals a protectionist vision of the US economy, aimed at strengthening local production in the context of its commercial war with China, which For now it remains in the ideological plane. In this sense, classic liberal economists argue that the imposition of tariffs increases national products, increasing inflation, which affects consumption and, ultimately, the generation of wealth.

In this context, Maximiliano Suárez, partner of Fortress Capital, expressed in dialogue with Scope That this turn in Trump shows that these decisions are an international negotiation tool, more than an economic policy. “Tariffs are weapons of diplomacy and not so much commercial. While they are inflation, it would believe that tariffs are not ended up being as high or as permanent as they were hinted at the beginning.”

Beyond the decision that Trump is making in the passing of the days, Gustavo Neffa, Research For Traders partner He told this medium the reason why these measures are negative for the world economy. “Companies are reduced their profits due to lower exports and possible falls in the prices of some products, which could not only boost inflation in countries affected by tariffs, but also in those that implement them, also generating an economic deceleration global. Maybe the US can benefit in the short term, but not in the long term, ”he explained.

So things, A determining factor is the role of the US Federal Reserve. From the end of the pandemic, the central banks faced difficulties in reducing inflation. The Fed, with its 2%goal, cut the rates three times in 2024. Although at its last meeting it acknowledged that inflation advanced towards the target, He also admitted that the price increase rhythm remains high. This Monday, the inflation fact of the European Union showed that inflation remains the main concern.

Argentina closely follows events

About the impact in Argentina, Javier Timerman, Executive partner in ADCAP Grupo Financiero, warned that these new tariffs could affect the interest rates policy of the Fed, which would be forced to keep them high to contain inflation.

“From Trump’s victory, rates cutting projections by 2025 were reduced from six to only two. This scenario It complicates the possibility of Argentina returning to international markets in the short term. A change in the policy of the Fed will impact risk assets And, in particular, in the country, which has resorted to an exchange anchor as a strategy to control inflation, “he said.

For Neffa, a more inflationary overview can show A more “Hawkish” Federal Reserve Veta At least waiting for those impacts on inflation not to materialize, but maintaining “the high guard” with a stronger dollar.

Indeed, he remarked that the main impact for Argentina is the Low of commodities prices that further complicates the agro -export sector and a larger entry barrier for local goods that are exported. Beyond this point, the analyst highlighted two possible alternatives: 1) diversifying trade to China and 2) Milei and Trump’s link can help, especially if there is a possibility of free trade.

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According to Suárez, beyond the development of the tariff issue, the short -term volatility will cause greater caution and a longer term for a new reduction of rates by the Fed, which would bring greater short -term volatility in the short term affecting the sovereign fixed income. “Higher rates will impact Argentine bonds for a matter of ´risking ‘“, advance. For Argentina, The increase in “long-term” rates will negatively affect the value of its bonds.

However, there are more opportunities to cooperate with the US. In this sense, it remains Optimistic of the relationship that Trump maintains with Javier Milei that allows access to better conditions in renegotiation with the IMF. “It has been shown that Trump is very versatile when negotiating and uses all available tools,” said the analyst.

From Econviews, the consultant of Miguel KiguelThey contribute that the impact will also be on the oil price Since Trump will seek to increase hydrocarbons production, affecting the profitability of projects in Vaca Muerta. “This could be exacerbated if Trump manages to end conflicts in Ukraine and the Middle East,” they warned.

Finally, Juan Manuel Franco, Chief Economist of Grupo SBS linked to this last aspect, He stressed that in a context of volatility, the strategy in “Equity” seem “to skew portfolios towards sectors favored by the deregulation in the US: that is, energy and financial sector.”

In turn, he kept his eyes expectant for the dynamics of the Brazilian real It can generate additional pressure to the exchange anchor imposed by the national government (Something that has already happened in November), and in the prices of commodities, especially agricultural ones, in a context in which the lack of rains in harvest estimates begins to feel.

Source: Ambito

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