10.02.2025 – Donald Trump’s In Office, Your Exports Are Tariffied
Donald Trump has returned to office and has already put pen to paper on over 20 executive orders, more than any previous president signed on their inauguration day. From the protectionist policies we expected to see such as “Protecting The American People Against Invasion” to the slightly bizarre “Putting People Over Fish”. Trump is making his mark but so far, the imposition of widespread tariffs seems to have been avoided – it seems someone has tapped him on the shoulder and reminded him that he can’t have lower inflation and widespread tariffs.
25% tariffs were briefly imposed upon Colombia’s imports and 10% tariffs on Chinese goods are likely to be longer lasting but elsewhere Trump is throwing America’s economic weight around to get his way. We have already seen this with Canada and Mexico where the threat of tariffs very swiftly brought government officials to the negotiating table, leading to the imposition of the tariffs being delayed. I suspect that this may initially be how tariffs are utilised and that at times Trump’s bark may well be more intimidating than his bite. However, as with what we’ve already seen, it’s not to say he won’t use them to get his way.
It’s clear Trump sees China as the nation’s main international trade competitor. Elon Musk becoming his new best friend and a plethora of tech CEOs lining the front row of his inauguration appears to be a clear sign that he believes technology companies have a key part to play in future growth, a view reinforced by the subsequent signing of an executive order titled “Removing Barriers To American Leadership In Artificial Intelligence”. Unfortunately for him, as at the time of writing, at the top of the Apple App Store charts is a Chinese AI app called DeepSeek which has caused Nvidia to DeepSink, falling in value by $589bn, the largest ever single day fall. The reason not necessarily being that the technology is superior in performance, all AI software remains far from polished, but the reported massive difference in development cost, power requirements and number of chips needed to function, brings into question the future level of demand for Nvidia chips.
Accusations of intellectual property theft are now flying around and I doubt this will be the last we hear on the matter. Any competition is positive and the real winner will be the end user. All BAM portfolios have exposure to a number of companies involved in AI, but this is likely to be less than our peers due to the big players in the sector being US tech giants that we feel are currently overpriced. As for Donald and the wider US, we remain underweight, primarily on valuation grounds but we must also consider the unwanted potential for political surprises.
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