CIOs pause net-new IT investments as global tariff jitters bite Gartner has trimmed its growth forecast for worldwide IT spending in 2025 as an "uncertainty pause" hits net new spending, caused in part by the unpredctability of US President Donald Trump's trade tariff policy. In January, the tech analyst estimated growth in global IT spending this calendar year would hit $5.61 trillion, up …
Trump will do what he always does: chicken out when playing the bully with former trade partners just leads them to seek out more reliable partners.
Carney has been spending a large amount of his time dealing with Europe and has signed several agreements with them.
The US used to be a reliable trade partner for Canada; now we've got the Pumpkin Fuhrer claiming that the free trade deal he negotiated and signed is "bad for America" and that Canada is a "threat."
You damned straight we're a threat: we're busy proving to the world that nobody "needs" to give in to bullies.
It's hard to say what Trump will actually get out of Europe. He might even actually get something, and if he does he's sure to parade it around like an emperor's triumph.
However, there's a cost to erosion of trust. It's not even that much of a hidden cost. Whatever he gets now, the USA will lose ten times over later, as trading partners start hedging their bets, find different sources, look elsewhere.
His policy is: get something now, and leave the hot mess for someone else to deal with. You see it in CEOs that gut the company to get a profit boost, leave it while the options are good, and then the company folds. Problem is, when it's nations that do it, the results are much uglier.
He doesn't even care about "get something now". He doesn't care whether he accomplishes anything with his insane trade war, he only cares about winning the PR war. He keeps whining about the EU's VAT as being something unfair to US companies, as if EU companies aren't subject to the exact same VAT. He'll never get the EU to budge on that, anymore than the EU could get Florida to eliminate its sales tax.
But if the EU made some token concession like if they had a tariff on US made automobiles and they were willing to drop it he'd shout that from the rooftops and his supporters would eat it up and claim it as a huge win for the US. It wouldn't matter though since the cars made in the US are mostly SUVs and pickups (the compact cars US automakers actually sell in the EU are probably built in Mexico, or maybe already within the EU) and Europeans don't want our big vehicles for a variety of reasons and lower prices wouldn't change that. Trump's IQ is about 40 points too low to understand that though, all he cares about is the sound bite (or the modern equivalent, the tweet) claiming victory.
The thing is he's only winning even as a "PR war" is the existing support of the same fools who believe that consumers don't pay for tariffs, other nations do. Everyone else is laughing uncomfortably at the US while it goes down the drain, helpless to stop it's own oncoming trade disaster. Nobody trusts the US any more. China is a more stable trade partner than the US, and they've got huge tariffs on Canadian canola and other products in retaliation for our tariff on their dumped EVs. (If you're selling it for less than cost to manufacture, it's called "dumping", and it's illegal under international trade laws.)
As to tariffs: Prices go up for everybody who buys that product, regardless of where the taxes come from. It is ultimately the consumer who always pays for tariffs on products. And believe you me, there isn't much at Wally World (Wal-Mart) that isn't made overseas, usually in China. So the favourite source of "cheap" products in the US is now home to some of the most inflationary tariff jack-ups the world has seen since the 1930's.
And for the same reason: tariff/protectionist economies implode, especially if there is an accompanying stock market bubble to panic into disaster mode. There are many bubbles on the US markets right now, especially the much-vaunted Artificial Ignorance bubble.
Odds are, within five to ten years of the start of Drumpf's trade war, the Euro will have replaced USD as the preferred currency of trade on global markets. Or the Yuan.
Putin plays the long game; so does Xi.
Der Pumpkin Fuhrer is a buffoon with the IQ of a rutabaga.
the Euro will have replaced USD as the preferred currency of trade on global markets. Or the Yuan.
Not going to happen. The Euro bond market isn't large and liquid enough to supplant the dollar in that role, and the yuan isn't free floating.
What will happen is that the dollar will be replaced by a basket of currencies in which the dollar is still a major component, and the euro and yuan will also be major components. Rather than trade being settled in a single currency, we'll probably see it start to be settled in multiple currencies in a blended fashion. That reduces the risk of currency movements of one currency (like the dollar's decline this year thanks to Trump) or intervention like how China will act to keep the yuan in a narrow window against the dollar.
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