President Donald Trump’s tariffs on imported steel and aluminum have spooked investors, raising concerns that trade wars could ensue. But Joseph Davis, Vanguard‘s global chief economist, is unfazed by the stock-moving actions out of the White House.
In a recent interview, Davis told Investopedia that the fund company internally believes the direct effect from the currently announced tariffs should be “fairly small and trivial,” noting that the impact on economic growth is basis points in size, if that. “The U.S. has the lowest tariff rates in the world, well below the G20 average,” said Davis, referring to the world’s 20 largest economies. “The greatest risk, of course, is trade tensions escalate.”
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Earlier this month, President Trump surprised the stock markets by announcing that he was imposing 25% tariffs on imported steel and 10% tariffs on aluminum. That created a sell-off in the markets and widespread fear of a trade war breaking out. When signing the tariffs into policy, President Trump walked back the proposal a bit, providing exemptions to Canada, Mexico and Australia….