Trump's Tariffs and Middle East Conflict: Navigating Economic and Geopolitical Risks
Potential implications of the U.S. initiating military action for financial investors
By Christina Lohner
Investors need a keen eye for stocks given the antics of the current US President, but not because of the escalating Middle East crisis.
The possibility of a US-Iran conflict is causing ripples in the stock market. According to reports from Bloomberg, the US is preparing for a potential attack on Iran in the near future. However, capital market expert Stefan Riße argues that investors shouldn't lose sleep over a Middle East war—the real danger lies elsewhere.
Trump's Jokes and Hidden Dangers
Riße expects the impact of a US military intervention on the stock market to be minimal due to the US's overwhelming military superiority. The countries in the region, notably Iran, wouldn't dare challenge the Americans, according to the capital market strategist from Acatis. Therefore, he believes there'll be no regional war and no dramatic oil price surge.
Still, there's a potential for bottlenecks if oil tankers stop passing through the Strait of Hormuz. While this issue primarily affects China's oil supply, it can be mitigated by boosting imports from Russia. Economically, the situation remains manageable.
Riße echoes past experiences in the Gulf War, Iraq War, and Israel's conflicts, reaffirming that the dust always settles in the end, with the regional nations lacking the military might to challenge the US. However, Pakistan, with its nuclear arsenals, presents a different story, but it currently does not pose a direct threat to the US, Riße explains.
Inflationary Heatwave
The real concern for investors, according to Riße, is the unresolved US trade war. The uncertainty surrounding tariffs and immigration policy could fuel inflation, with rising costs for both consumers and businesses. The absence of farm workers for the harvest season and reduced investments due to general uncertainty are already making their mark.
"I wouldn't personally sell stocks because of the Iran war," says Riße. "But we generally have a more cautious stance at the moment." The US stock market is highly valued, and given the performance of the S&P 500 under such valuations, Riße sees limited gains over the coming years.
Sources: ntv.de
- Stock prices
- USA
- Iran
- Middle East conflict
- Trade wars
- Inflation
Insights:
- Despite recent recovery, the broader market faces downside risks due to tariffs, with potential recession or stagflation a concern[1].
- Rising inflation, fueled by tariffs and immigration policies, could exacerbate economic pressures, especially since farm workers are missing during the harvest season, and investments are being scaled back due to uncertainty[1].
- Persistent trade disruptions stemming from retaliatory tariffs could intensify the risk of a global trade war and slow economic growth[3].
The community must stay updated on the evolving US trade war, as Trump's tariffs and employment policies could lead to inflation, causing financial strain for both consumers and businesses in the corporate sector. Meanwhile, politics regarding the Middle East conflict, particularly the possibility of a US-Iran conflict, may have minimal immediate impact on the stock market according to market expert Stefan Risse, but potential risks remain due to the possibility of oil tanker bottlenecks affecting business and finance.
