🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

What Bob Lighthizer's absence could mean for US trade policy

Published 12/11/2024, 11:50 PM
© Reuters.
DBKGn
-

Investing.com -- Reports last week suggested that Robert Lighthizer might not be taking on a role in the upcoming Trump administration. This development was unexpected, given that Lighthizer was a key figure behind the tariff strategies introduced during Trump’s first term and shared the President-elect’s firm stance on trade negotiations.

In a recent note, Deutsche Bank (ETR:DBKGn) strategists have discussed the potential implications of Lighthizer’s absence, placing it within the broader context of Trump’s recent statements on tariffs.

First of all, despite Lighthizer's likely absence, tariffs remain “likely,” Deutsche strategists note, with President-elect Trump reiterating his belief in their effectiveness in a recent NBC interview.

Trump has threatened to increase tariffs on key trade partners, including Mexico, Canada, China, and the BRIC nations. Jamieson Greer, Trump's pick for U.S. Trade Representative, and Peter Navarro, appointed as a Senior Counselor for Trade and Manufacturing, are both seen as proponents of stringent trade policies.

“We therefore continue to anticipate that more tariffs are coming, with or without Lighthizer,” strategists led by Matthew Luzzetti said in a note.

Still, the composition of Trump's economic team suggests a nuanced approach to tariffs. Treasury Secretary nominee Scott Bessent has advocated for a strategic application of tariffs, while Commerce Secretary nominee Howard Lutnick views them as a “bargaining chip” to lower trade barriers for U.S. exports.

“Thus, while tariffs may be coming, there will be voices in the room that will act as meaningful counterweights to hawkish inclinations on trade. We would view the universal baseline tariff as most at risk here,” strategists noted.

The absence of Lighthizer might be interpreted by markets and trade partners as a softening of the U.S. trade policy. According to Deutsche Bank, “Trump is unlikely to want to send that signal.”

To maintain a firm stance, strategists said Trump may increase the rhetoric around tariffs to emphasize their importance in his administration's agenda. The recent threats of heightened tariffs on Canada, Mexico, and the BRIC countries serve as examples of this approach.

Without Lighthizer's maximalist tariff strategy, strategists believe the economic outlook could see some benefits.

A less aggressive tariff policy from the outset might reduce the risk of a significant supply shock to the economy. Consequently, the bank sees an improved distribution of growth and inflation outcomes, albeit marginally.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.