Global Trade war escalates with New US tariffs

Miko Santos

Mar 04, 2025

Transcript

Today is March 4, and here is your Morning financial briefing!

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Global Economic Alert: Key Developments Reshaping Markets

US Trade Tensions Escalate

Breaking now: United States implementing substantial tariff increases on multiple trading partners
25% tariff set to hit virtually all imports from Canada and Mexico
Canadian energy products receive partial exemption with reduced 10% rate
Chinese imports facing doubled tariffs to 20%
Markets responding with volatility as investors assess potential economic disruption
Expect possible retaliatory measures and supply chain complications in coming weeks

Ukraine-US Relations at Pivotal Point

Ukrainian President Zelenskyy signals openness to new Trump meeting following "disastrous" initial encounter
Any White House meeting must be "serious" to justify diplomatic effort
Strategic shift: Ukraine prepared to accept natural resources deal with United States
Development comes amid mounting pressure for sustainable diplomatic solutions
Watch for potential new economic and strategic cooperation framework

Economic Indicators Signal Mixed Outlook

Australia Q4 Business Indicators:
- Company profits rose 3.2% quarter-on-quarter after inventory adjustment
- Mining sector driving growth
- Business wage bill increased 1.4% quarter-on-quarter (annual rate: 4.7%)
- Private non-farm inventories expected to contribute 0.3 percentage points to quarterly GDP
Commonwealth Bank forecasts:
- Real GDP growth in Q4 2024: 0.5% quarter-on-quarter
- Annual growth projection: 1.1% year-on-year
Eurozone inflation:
- Consumer prices up 2.4% from February 2023 (down from 2.5% in January)
- Figure exceeds economists' median estimate of 2.3%
- Services inflation shows modest decrease to 3.7%

Manufacturing Indicators Reveal Concerning Trends

US ISM manufacturing index:
- Declined 0.6 points in February to 50.3
- Remains in expansion territory (above 50) but showing weakness
- ISM price measure jumped 7.5 points to 62.4 – potential inflation warning
- New orders contracted to 48.6 – first contraction since October 2024
- Largest monthly decline since April 2020 pandemic period

Global Markets Performance

US benchmarks: Declined between 0.8% and 1.4%
Europe: Euro Stoxx 50 gained 1.4%
Asia:
- Japan's Nikkei rose 1.7%
- Chinese indices showed mixed results
- Australia gained 0.9%
- New Zealand's S&P/NZX 50 dropped 0.4% (remains down over 4% for the year)

China Outlook

Caixin manufacturing PMI: 50.8 in February (up from 50.1 in January)
Chinese policymakers expected to announce highest official budget deficit target in over three decades
Move designed to support economic growth amid ongoing challenges

Day Ahead: Key Releases

Australia's Balance of Payments (Q4 2024)
January retail trade figures
Reserve Bank of Australia Board Meeting minutes
CBA analysts anticipate May for next rate cut

Analysis based on ASB Daily Alert compiled by Chris Tennent-Brown

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