Trump's tariffs trigger crude oil plunge and economic jitters
Crude oil has dropped to $66, the lowest it has been since 2021. After Trump decided to impose tariffs on nearly every country in the world, investors are concerned about the health of the U.S. economy. "This, in turn, has led to a flight from risky assets," assessed Arkadiusz Banaś, a specialist in analyses at BM Alior Bank.
Crude oil prices have fallen to levels unseen since 2021. Contracts for crude oil converted into Polish zloty have dropped by 25% over the last year to 254 PLN per barrel of West Texas Intermediate (WTI). In a single day, the drop exceeded 8%. On the New York Mercantile Exchange, a barrel of WTI is priced at $66.
After Donald Trump's appearance on Wednesday evening announcing "America Liberation Day," there was a marked sell-off in capital markets, and the exchanges turned red. Investors are concerned about isolationism, the potential development of a tariff war, and consequently, the future state of the U.S. economy.
This, in turn, has led to a flight from risky assets – major stock indexes are significantly declining, oil is becoming cheaper, the U.S. dollar is weakening, and treasury bond yields are falling (meaning prices are rising) - wrote Arkadiusz Banaś, a specialist in analyses at BM Alior Bank, in a commentary.
Dawid Czopek, a fuel market expert, emphasized that despite the breadth of the new tariffs, their impact on trade may be less than we think today. "It looks like the United States is anticipating several exemptions from these tariffs announced by Trump. These include oil," he explained.
The expert pointed out that despite this, there are concerns about the state of the economy in the markets.
Most investment banks have no doubt that if these tariffs were maintained in the form the American president announced, in the original form, we would be dealing with a serious recession - said the manager of Polaris FIZ.
"In a pessimistic scenario, if nothing changes with the announced tariffs, we will have oil at $50, or maybe more likely $40 per barrel," predicted Dawid Czopek.
"America Liberation Day": What did Donald Trump announce?
President Donald Trump signed an executive order on Wednesday on "reciprocal tariffs" on goods imported into the United States. The rates announced by the USA are to constitute half of the total tariffs and non-tariff trade barriers applied by other countries. They vary depending on the country and range between 10% and 34%. They are, for example:
- for goods from EU countries - 20%,
- for China - 34%,
- for Japan - 24%.
Russia was not included on the list, justifying this decision by the minimal trade exchange with this country due to sanctions imposed on the Kremlin in 2022, after the authorities in Moscow launched a full-scale invasion of Ukraine.
Trump's decision sparked controversy and strong reactions from countries worldwide: some declared a willingness to negotiate, while others threatened retaliation and announced strengthening relationships with other trading partners.
German Economy Minister Robert Habeck warned that the "American tariff mania" could cause enormous damage worldwide. For consumers in the U.S., "this day will not be a liberation day, but a day of inflation." He stressed that if the USA did not want a negotiated solution, the EU would provide "a balanced, clear, and determined response."
