Daily Economic Update

US: Trump defiant on tariffs, threatens additional 50% duties on China amid extreme US stock market volatility. President Trump, while downplaying last week’s market rout, continued to justify tariffs, calling them “medicine to fix something,” and added that the administration wasn’t considering any 90-day pause as cited in some media reports. He also threatened to impose an additional 50% tariff on China if the latter doesn’t rescind, by today, its 34% retaliatory tariff on US goods. Meanwhile, US Treasury Secretary Bessent, in an interview, stated that some 70 countries had approached the US for talks following ‘Liberation Day’ tariff announcements and hoped to see tariff “levels come down” over time through “good negotiations.” He is also said to have urged the president to prioritize such deals to reassure markets about the administration’s overall tariff strategy. On the other hand, other officials from the administration, such as advisor Peter Navarro and Trade Secretary Howard Lutnick, were adamant that tariffs are here to stay, delivering hawkish comments about the difficulties in reaching trade agreements with various counties. After yesterday’s wild swings in the US markets (S&P 500 fluctuated from -4.7% to +3.4% but closed just 0.2% down) and sharp losses in Asian and European markets, some Asian markets are staging a relief rally this morning, with Japan’s Nikkei 225 leading (+5%), while US equity index futures were also up 1-2% at the time of writing.

Eurozone: EU countries meet to discuss tariff solutions. Trade ministers from across the EU met to discuss potential strategies to counter the US’s recent 20% tariffs on the group’s exports to the US. European Commission President Ursula von der Layen suggested a “zero-for-zero” tariffs with the US, where both the EU and US would eliminate tariffs on industrial goods and autos moving between the two trade partners. In parallel, the EU is also preparing its retaliatory plan in case trade negotiations don’t lead to any results. In terms of data releases, February’s retail sales gained 0.3% m/m, but were still below market expectations of a 0.5% rise.

China: Commerce Ministry vows to fight the additional US tariffs. The trade war between China and the US widened further after China vowed to “fight to the end” if the US imposes further tariffs on the country’s exports. This response comes after President Trump threatened an additional 50% tariff on all Chinese goods, a response to Beijing’s retaliation against his initial ‘Liberation Day’ tariffs. After Chinese equities witnessed steep losses on Monday, policy support kicked in with the central bank letting the currency weaken and state-linked funds stepping in to buy stocks, which is helping Chinese equities stabilize in today’s trading.

Egypt: EGP depreciates as foreign investors exit local debt market. The EGP continued to depreciate against the USD, closing at EGP 51.44–51.47, as foreign investors exited Egypt’s local debt market for a second consecutive day. Interbank transactions since Sunday totaled an estimated USD1.5 billion. The recent drop follows global market turmoil sparked by US President Trump’s new tariffs, triggering risk-off sentiment and over USD1 billion in outflows from Egypt’s carry trade.        

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