President Trump’s use of tariffs as a negotiating tool led Canada and Mexico to agree to strengthen border security and combat drug smuggling, showcasing how economic pressure can drive policy changes. However, critics argue that much of what was agreed upon wasn’t new, questioning the long-term effectiveness of these measures. In response, Europe and other nations are reducing reliance on the U.S. by forming new trade alliances, such as the EU finalising deals with South American countries, Switzerland, and Malaysia. The tech industry faces potential disruptions as tariffs on Chinese-made electronics could increase costs for products like iPhones and laptops, prompting companies with factories in China to explore manufacturing outside China. These developments highlight the need for businesses and investors to prepare for volatility and adopt diversified strategies.

U.S. and European stocks initially fell sharply but rebounded slightly after the delayed tariffs. Tech stocks were hit hardest, with Tesla dropping 5%, citing weak California car registrations and chipmakers declining after DeepSeek capability provokes investors to question growth. Consumer staples, seen as safer investments, led gains, while IDEXX Laboratories surged 11% after strong quarterly earnings, contrasting with Moderna’s underperformance. Gold continued to shine in the face of trade tensions and inflation fears, marking its fifth consecutive weekly gain. Prices hovered near record highs at $2,810 an ounce. Positive labour data are in focus with potential economic recovery following manufacturing expansion, breaking its 26-month streak of contraction.

Oil prices fluctuated, losing initial gains after President Trump paused tariffs on major U.S. oil suppliers, now facing risks of China’s retaliatory tariffs. While OPEC+ maintained plans to gradually increase oil supplies starting in April, overflow of supply from Trump's loose energy policy could hinder this plan. In currency markets, the Canadian dollar and Mexican peso stabilised after the tariff delay, while the Chinese yuan rebounded slightly from record lows as traders speculated Beijing might negotiate to cushion the impact of fresh U.S. tariffs. The euro weakened as Trump warned that Europe could be next on its list of tariffs.

Source: Reuters, MarketWatch, MT
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