Dan Clifton on Trump's Trade Policy: Canada & Mexico as Beneficiaries

Trade Policy Landscape

• 📈 The current period is marked by significant policy developments, including trade, Federal Reserve actions, and potential government shutdowns.
• 🇨🇳 On China trade, a status quo agreement is expected, delaying rare earth restrictions and avoiding new US tariffs, which protects downside risk for markets.
• 💡 Potential upside from the China trade deal could come from reduced tariffs, possibly linked to an agreement on fentanyl, though this is considered lower probability.

Shifting Global Trade Dynamics

• 🌍 Trump is implementing smaller agreements with Asian countries to restrict China's ability to transship goods into the US, strengthening his negotiating position.
• 🇲🇽🇨🇦 Canada and Mexico are identified as the greatest beneficiaries of Trump's trade policy, likely due to being the only countries without reciprocal tariffs, resulting in the lowest effective global tariff rates.
• 📍 This strategy aims to bring supply chains closer to the US in a move towards a deglobalized world.

The Future of US-China Trade Relations

• 🚫 A return to broad, meaningful trade deals with China is considered unlikely; the focus is shifting to a deglobalized world.
• ⚠️ The realization of supply chain risks (e.g., pharmaceuticals, minerals) is driving countries to become more self-sufficient.
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