US President Donald Trump has announced tariffs on the world, which the world has been anticipating in the last few weeks. This could affect ASX shares among other global stocks.
US tariffs on the world
According to reporting by various media, including the BBC, Trump has decided to put a minimum tariff of 10% on every country to “help rebuild” the US economy. That includes countries like the UK, Australia, Singapore, Chile, Brazil and Columbia.
However, for countries that the US perceives as having higher tariffs on the US, he has decided to implement a tariff of “approximately half”.
For China, which supposedly has a 67% tariff on the USA, Trump is putting a 34% tariff on the Asian economic giant.
The EU gets a 20% tariff, Vietnam gets a 46% tariff, Taiwan gets a 32% tariff, Japan gets a 24% tariff, India gets a 26% tariff, South Korea gets a 25% tariff, Thailand gets a 36% tariff, Bangladesh gets a 37% tariff and so on.
It’s not as though a manufacturer can easily switch manufacturing from China to another Asian country – all Asian countries have tariffs.
So, ASX shares that send products to the US are exposed to a 10% tariff if they don’t manufacture inside the US.
Some of the things that President Trump said included:
[The trade deficit represents] a national emergency that threatens our security and threatens our way of life.
For this reason, starting tomorrow the US will implement reciprocal tariffs on other nation.
There’s no tariff if you build your product right here in America.
There will never have been a transformation of a country like the transformation that’s already happening in the United States of America.
We have to start taking care of our country now.
From this day on we’re not gonna let anyone tell American workers and families that they cannot have the future that they deserve.
How I’ll invest in ASX shares
This announcement has added a lot of uncertainty to the global economy. Will it lead to increased inflation in the US? Can countries negotiate a lower (or zero) tariff?
But, I’m not going change how I invest in ASX shares. I’m still going to look for good businesses at attractive prices that I think can perform over the long-term.
I think the lower share prices can be an opportunity and I’ll continue calling out ASX shares I think are too cheap for their prospects.
