Trump bluster or market buster? Trump bluster or market buster? Trump bluster or market buster?

Trump bluster or market buster?

Forex 4 minutes to read
Michael O’Neill

FX Trader,

Summary:  FX markets are trading like the US threat of a tariff bump on Chinese goods slated for Friday is merely Trump bluster. They appear to be hoping for a last-minute reprieve, and they aren’t likely going to get it.

The President of the United States has been very vocal about his trade negotiation strategy. He believes that if countries that want access to the US market, they must dance to his tune and his tune is about extracting benefits for Americans. In his 1987 book, “The Art of the Deal,” he wrote, “use your leverage.” 

It worked during the NAFTA renegotiation. Trump successfully killed that deal and replaced it with the United States Mexico Canada Agreement on trade. The Americans used the clout of their economy, which is over ten times larger than that of Canada, to extract concessions including, access to Canada’s dairy industry, and increasing US content in autos. After it was all said and done (although not ratified in America) the US continues to levy 25% tariffs on the import of Canadian steel and 10% on aluminium.

China is keenly aware of the US negotiating tactics. The US economy is $21 trillion and is the largest in the world but China’s economy at $14.1 trillion, is the second largest. Arguably, China is in a far better negotiating position than that of Canada or Mexico which may explain their latest ploy.

Reuters, citing sources, claimed China changed the draft of previously agreed commitments. The US administration responded by announcing plans to raise tariffs on $200 billion of Chinese imports, effective May 10. These talks could easily collapse, and since there isn’t any pressing need for a deal this week or this month, demand for safe-haven assets may increase.

FX markets and Wall Street have adopted a “wait and see” approach today. The FX majors are modestly weaker than where they opened this morning except for sterling. GBPUSD extended earlier losses on reports that Brexit talks between the Conservatives and Labour and are trading at 1.2992 as of 14:10 GMT. Wall Street is unchanged in early trading but is still vulnerable to a retreat.
Chart: GBPUSD 30 minute. Source: Saxo Bank


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.