Tariff Threats Increase: What the Latest Stock Market Decline Means for Investors and Businesses in Oman
LONDON: Stock markets largely declined on Friday as U.S. President Donald Trump intensified his trade war rhetoric, hinting at increased tariffs, including a potential 35% tax on imports from Canada.
Trump emitted more than 20 letters to various governments, threatening to impose new tariffs if agreements are not established by August 1, which dampened earlier market optimism.
In contrast, Bitcoin continued its upward trend, achieving an all-time high above $118,000. The U.S. dollar strengthened against most major currencies, while oil prices also rose.
"The optimism from earlier in the week is yielding to concerns over an unexpected tariff announcement as the weekend approaches," remarked Jochen Stanzl, chief market analyst at CMC Markets.
As trading commenced, Wall Street’s three main indices fell back, with the S&P 500 and Nasdaq Composite retreating from their record highs. In Europe, investors awaited news regarding a new tariff level affecting the European Union, leading the Paris and Frankfurt stock markets to drop by 0.8%.
"The market is still viewing these developments as a negotiating strategy, which has mitigated the overall impact," stated analyst Patrick O’Hare from Briefing.com.
On Thursday, Trump escalated his trade rhetoric, warning that Canada could face a 35% duty, while other nations might face general tariffs of up to 20%, increased from the current 10%. This announcement followed his proposal for 50% tariffs on copper imports and 200% levies on pharmaceuticals, as well as a new 50% charge on Brazil.
These moves are part of an ongoing campaign by the White House aimed at addressing what it claims are decades of unfair trade practices against the United States.
Initially, Trump’s tariff announcement on April 2 caused significant market turmoil until he suspended the tariffs for three months. Compared to that upheaval, the recent measures have had less pronounced effects.
In London, the FTSE 100 and the British pound fell after reports indicated that the UK economy unexpectedly contracted in May, marking its second consecutive monthly decline. Meanwhile, market activity in Asia was mixed, with gains in Hong Kong, losses in Tokyo, and stability in Shanghai.
BP shares surged by 2.4% in London following the company’s announcement of expected growth in oil and gas production for the second quarter. – AFP
Special Analysis by Omanet | Navigate Oman’s Market
The recent escalation in US trade tensions, particularly the potential for higher tariffs, poses both risks and opportunities for businesses in Oman. While increased costs for imports could affect profit margins, savvy investors should consider diversifying supply chains and exploring new markets to mitigate risks. Entrepreneurs might also find innovation opportunities as sectors adapt to changing global dynamics, especially in oil and gas where prices are gaining traction.
