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FxWirePro: Why Trump might delay auto tariffs?

Bloomberg news agency reported that President Trump to delay the decision on auto tariffs for six months so, which has somewhat helped the U.S. benchmark stock index s&P500 recover some of the lost ground. The index is up more than 13 percent in 2019 but due to trade tensions, the index has shed more than 2 percent.

The decision on auto-tariff was due this week, so, why the delay:

  • President was expecting to seal a trade agreement with China before the decision auto-tariffs, but that won’t be the case with China wanting to renegotiate the agreement once more and with both sides resorting to tariff war. At this time, another round of tariff war largely with Germany and Japan would not be that wise.
  • Moreover, the United States is already in negotiation with the European Union over several geopolitical issues such as Iran, and Israel-Palestinian peace agreement. Imposing auto tariffs at this time doesn’t help those negotiations.
  • Moreover, the EU is currently negotiating a trade agreement with Japan. The report suggests that the U.S. wants to wait out these negotiations.

We don’t expect global auto tariffs from the United States until the showdown with China ends.

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