Helter Skelter!                                                                               11 April 2025

There is no doubt that Dubai’s bull property market continues unabated, entering 2025 with robust Q1 figures proving the point, with all indicators of much the same expected for the rest of the year. Since 2020, property sales have rocketed 521.7% in value to US$ 29.84 billion, with transactions 377.6% higher numbering 37.0k.

• 2020 – US$ 5.72 billion          9.8k transactions
• 2021 – US$ 6.70 billion          11.6k transactions
• 2022 – US$ 14.88  billion       20.2k transactions
• 2023 – US$ 24.25 billion        31.1k transactions
• 2024 – US$ 29.84  billion       37.0k transactions

On an annual basis, in Q1:

• total         transactions up 22.8% to 43.5k; value up 28.9% at US$ 31.36bn;

     median property prices up 13.3%

• off plan     transactions up 33.4% to 29.8k; value up 34.4% at US$ 21.50bn
• secondary transactions up 4.6% to 13.7k; value up 18.3% at US$ 9.86bn
• rentals       transactions up 2.7% to 166.9k; value up 18.7% at US$ 3.98bn

The UAE’s 2024 tourism sector grew 3.0%, on the year, and generated US$ 12.26 billion in revenue, according to the Chairman of the Emirates Tourism Council. Abdulla bin Touq Al Marri attributed the robust state of the sector to progressive government initiatives and its sustainable policies and strategies. Hotel occupancy rates, among the highest in the world, climbed to 78% in 2024, as the country saw the opening of sixteen new hotels, bringing the total to 1.25k, with a 3.0% rise in rooms to 217k. The number of hotel guests across the UAE topped 30.8 million, equating to an annual 9.5% growth.

Having reached a nine-month high at the end of 2024, the UAE March PMI, dropped 1.0 to 54.0 on the month which shows a ‘slower but solid improvement’ in private sector performance.  New job creation in the UAE was at its weakest over the last three years, with many companies maintaining their payroll figures at the same levels.  UAE businesses were ‘subdued’ in March, and in fact recorded the weakest showing over the last 3 years. Most businesses are showing a preference to keep their workforce numbers at the same levels rather than go for major additions. Also marginally lower was demand growth in the UAE private sector – at its weakest since September 2024, although business conditions improved at a solid pace. It is obvious that UAE business entities are focussing on protecting their operating and profit margins, which saw some of them raise their prices at the ‘second-fastest pace in over seven years’. New order growth has softened which may indicate that sales targets are not being met, with problems due to widespread delays in customer payments – not a new problem for many businesses. With Trump tariffs becoming realty this month, April’s PMI will prove to be more interesting reading.

A study by Henley & Partners has indicated that Dubai is now ranked three places higher, on the year, to eighteenth in its‘World’s Wealthiest Cities Report 2024’. The emirate is now home to 81.2k millionaires, including two hundred and thirty-seven centi-millionaires (those with wealth exceeding US$ 100 million) and twenty billionaires. The emirate has fast become one of the leading global hubs for investment, business and HNWIs, and welcomed eight thousand, seven hundred new millionaires last year, with that number increasing by 102% over the past decade. With these figures, it is no surprise to see Dubai becoming the third-fastest growing city in the world for high net-worth individuals – behind Shenzhen and Hangzhou. The report revealed that Dubai increased the total number of HNWIs, by 12.0%, to 81.2k by the end of 2024. Driven by sustained economic growth, an investor-friendly climate, pro-active government initiatives and a strategic vision for the future, the report forecasts that the number of wealthy people, with a net worth exceeding US$ 100 million, is expected to double by 2034.

On his state visit to India, Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed,  inaugurated DP World’s state-of-the-art Free Trade Warehousing Zone in Mumbai. DP World has developed three world-leading FTWZs in India with an investment of over US$ 200 million. He noted that “the establishment of world-class logistics infrastructure, such as the Nhava Sheva Business Park, not only strengthens the trade connectivity between our nations but also reinforces our shared vision for growth, innovation, and sustainability”. These three Indian FTWZs are well integrated with DP World’s Jebel Ali Free Zone, facilitating seamless cargo movement and strengthening global trade connectivity for both countries.

In a special event, organised by Dubai Chambers, in Mumbai, and attended by the Crown Prince, India’s top business school, IIM Ahmedabad, announced it was set to open a new campus in Dubai, with plans already in place to build a UAE-India Friendship Hospital in the emirate. Furthermore, a total of eight MoUs were signed, including:

• Dubai Chambers signing three MoUs, with leading Indian industry bodies, to boost economic engagement
• DP World signing two MoUs, with Indian companies, to enhance supply chain and maritime collaboration
• Dubai’s Department of Economy and Tourism (DET) and IIM Ahmedabad to launch a world-class business school campus in Dubai. IIM-A aims to launch its one-year full-time MBA Programme in Dubai later this year. In the second phase, IIM-A will be allotted land for the establishment of a permanent campus, which is expected to become operational by 2029
• Dubai Health signing an agreement to establish UAE-India Friendship Hospital
• Dubai Medical University signing an agreement, with All India Institute of Medical Sciences, to advance academic and research collaboration, covering AI and digital transformation of medical education and healthcare

The UAE Ministry of Investment, India’s Ministry of Petroleum, and Sri Lanka’s Ministry of Energy have signed a JV agreement to develop Sri Lanka’s Trincomalee into a strategic energy hub. The deal will result in a range of infrastructure and energy projects, including the refurbishment and development of the Trincomalee Tank Farm, bunker fuel supply initiatives, and the possible development of a new refinery project; it also includes the construction of a bi-directional petroleum pipeline between India and Sri Lanka, strengthening regional logistics and fuel security. Mohamed Hassan Al Suwaidi, UAE’s Minister of Investment, noted that, “this MoU exemplifies the UAE’s commitment to strategic regional partnerships that promote diplomacy, long-term economic resilience and sustainable infrastructure development. Together with our partners in India and Sri Lanka, we aim to unlock the full potential of Trincomalee as a key energy and logistics gateway for South Asia”.

This week saw the signing of a MoU between the UAE and Ireland, in a bid to enhance bilateral economic and technical cooperation and to set up a joint economic commission between the two countries. Its remit will be to collaborate in various sectors, including trade, renewable energy, infrastructure development, the digital/green economy, supply chain resilience, food security and healthcare technology.

This week, the Central Bank of the UAE released statistics relating to January. Total investments of banks, operating in the UAE, rose by 1.0%, on the month, to reach US$ 2,024.25 billion, marking an annual increase of 16.1%. Bank investments in securities representing debt on others grew 26.1% to US$ 90.54 billion on the year. Held-to-maturity bonds rose by an annual 7.9% but declined by 1.1% on the month to reach US$ 91.47billion. Banks’ investments in equities grew by 19.4% on the year but dipped 1.5% on the month to US$ 5.20 billion. Other investments increased at an annual 13.2% and a monthly 2.2%, to US$ 15.20 billion. There was a 9.5% annual growth in total credit, which reached US$ 595.64 trillion, while total deposits grew by 11.8% on the year to US$ 77.38 billion. Banking assets increased by an annual 11.0%, and by 0.1%, on the month, to surpass US$ 1,243.05 trillion. The value of transfers processed through the UAE Funds Transfer System exceeded US$ 486.65 billion – 18.0% higher on the year. This included US$ 302.18 billion in interbank transfers and approximately US$ 184.47 billion in customer transfers. The value of cheques, cleared via image-based processing, reached US$ 32.28 billion in the month, involving 1.956 million cheques. Cash withdrawals from the Central Bank amounted to US$ 5.43 billion, while deposits totalled around US$ 4.15 billion.

As part of its continuous efforts to enhance the UAE’s investment environment, attract more investors and promote economic growth, the Ministry of Finance has issued Cabinet Decision No. 34 of 2025 on Qualifying Investment Funds and Qualifying Limited Partnerships. One major take from the updated legislation is the introduction of a favourable tax treatment, ensuring that investors deriving income from a QIF will not be subject to UAE Corporate Tax on the income, provided that the real estate asset threshold (10%), or the diversity of ownership conditions, are not breached. Furthermore, it offers greater flexibility, granting QIFs a grace period so any breaches of the diversity of ownership requirements, even after the first two years of establishment, can be remedied. This grace period allows them to remedy any breaches of the diversity of ownership requirements, provided such breaches do not exceed an aggregate of ninety days in a year or if they occur during the liquidation or termination of the fund. In future, any breaches of the diversity of ownership requirements will only impact the investors responsible for the breach and will not disqualify the overall fund as a QIF.

With the US$ 200 million acquisition of Bahrain’s BFC Group Holdings. Dubai-based, and DFM-listed, Al Ansari Financial Services is now the GCC’s biggest non-banking financial services company, as well as operating the UAE’s biggest remittance firm. The acquisition of BFC has raised the Group’s customer base by 29% and branch network by 60%, and has expanded Al Ansari’s presence across Bahrain, Kuwait and India. The firm expects early gains on its financials, including  double-digit EBITDA growth across the board including operating income, EBITDA and net profit after tax by 20%, 13% and 13%; it also noted that a stronger cash generation may result in a bigger dividend, with the Group CEO, Rashed Al Ansari, adding that “the anticipated boost in cash flow post-integration reinforces our commitment to providing strong returns for our investors”.

The DFM opened the week, on Monday 07 April, one hundred and fifty-nine points lower, (3.1%), the previous week, gained fifteen points (0.3%), to close the trading week on 4,966 points, by Friday 11 April 2025. Emaar Properties, US$ 0.45 lower the previous week, gained US$ 0.05, closing on US$ 3.28 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 5.22 US$ 1.96 and US$ 0.35 and closed on US$ 0.68, US$ 5.25 US$ 1.97 and US$ 0.34. On 11 April, trading was at one hundred and forty-four million shares, with a value of US$ one hundred and thirty-three million dollars, compared to one hundred and eighty-nine million shares, with a value of US$ one hundred and seventy-two million dollars, on 04 April.

By Friday, 11 April 2025, Brent, US$ 6.19 lower (9.7%) the previous week, shed US$ 1.08 (1.6%) to close on US$ 64.59. Gold, US$ 60 (2.0%) lower the previous week, gained US$ 214 (7.0%) to end the week’s trading at US$ 3,238 on 11 April.

All ME stock markets tanked on Monday, including the DFM driven to the double whammy of the US tariffs and the sinking of oil prices – and things can only get worse at least in the short-term. The DFM plunged 6.0% at the opening bell and closed the day 3.08% but during the morning session, Emaar Properties, Emaar Development and Dubai Islamic Bank lost 9.0%, 8.0% and 7.5%. Even more worryingly in the big picture is the fall in oil prices, which last week had shed 9.7% to close on US$ 65.67. If Brent were to move lower and hover around the US$ 63 mark, then there will be worries across the GCC; it is easy to see that there would be an impact on economic growth and probable cutbacks on diversification plans and capex budgets. It seems that Saudi Arabia’s break even could be around US$ 85, whilst the UAE’s fiscal break-even is around US$ 55. Luckily, the DFM recovered all its early week losses and ended on Friday with a marginal 0.3% increase but more worryingly for the UAE was the continuing decline in Brent Crude, down by 10.1% over the past fortnight.

In Q1, Airbus SE delivered one hundred and thirty-six commercial aircraft, six more than its rival Boeing’s, helped by handing over seventy-one jets in March to customers such as China Eastern Airlines and United Airlines Holdings Inc. The European plane maker has out-produced Boeing for years, but its US rival has been ramping up output while Airbus has struggled with supplier shortfalls. Airbus said it secured two hundred and eleven gross orders last month, to customers including Jackson Square Aviation and BOC Aviation, and had a 24.8k aircraft backlog. Based on current figures, this backlog will be cleared within the next one hundred and eight two quarters – or by 2071! Obviously, the major problem facing these two giants, along with the industry in general, is the uncertainty around Trump’s tariffs. Delta, its biggest customer, posted that it would not be paying any tariff costs on Airbus planes it imports.

Weeks after losing a court case which awarded a man US$ 50 million in damages for burns over a spilled hot cup of tea, Starbucks is facing two new lawsuits, caused by scalding liquids slopped over customers, at drive-throughs. The first case involved claims that, two years ago, a woman was seriously hurt when hot liquid tipped into her lap at a branch in Norwalk, near Los Angeles; it was alleged that one of the cups, in her order, was not properly secured. The second case was also in California, where it is alleged that a man was seeking unspecified damages for negligence, again caused by a drink not properly secured. The drink spilled onto his lap, leaving him with “severe burns, disfigurement and debilitating nerve damage to his genitals and buttocks”.

There was some good news for the UK economy, with the announcement that Universal is to build its first European theme park in the UK. Comcast president, Mike Cavanagh, praised the Chancellor and the Business and Culture Ministries for having “brought [the investment] over the finish line”, with equal effusiveness been shown by Rachel Reeves; however, the Chancellor refused to reveal how much public money was used to “get over the line”, considering that nothing was left on the table to save British Steel. She confirmed “the UK are backing Universal in this investment,” adding “the details of that are confidential”.

In a bid to soften the impact of Trump’s tariffs, South Korea, with exports to the US increasingly markedly over recent years, announced emergency support measures for its auto sector; last year, its auto exports to the US were valued at US$ 34.7 billion, and accounted for 49% of the country’s total auto exports. The government confirmed that it will negotiate with the US and that it will support the sector financially, (with an annual 15.4% increase  to US$ 10.18 billion), but also via tax cuts, (down 1.5% to 3.5%), and doubling subsidies to boost domestic demand. The global 25% levy started yesterday, with manufacturers expected to bear the brunt of the tariff costs in the first year. The government expects this to cause “significant” damage to South Korean automakers and auto parts manufacturers. The country’s main vehicle manufacturer Hyundai has recently announced a US$ 21.0 billion investment in the US and announced that it plans to keep sticker prices, on its current model lineup, steady until the end of May.

As it considers the ramifications of Donald Trump’s 25% tariff on imported vehicles, Jaguar Land Rover, owned by India’s Tata Motors will pause shipments of its Britain-made cars to the US for a month. A statement noted that “as we work to address the new trading terms with our business partners, we are taking some short-term actions, including a shipment pause in April, as we develop our mid- to longer-term plans.” It is estimated that it exports over 100k vehicles, including Range Rover Sports, Defenders and other models and that it has two months’ supply already in the US which will not be subject to the 25% tariffs. The US, being the UK’s second biggest vehicle importer after the EU, accounts for about 20% share of the market. Jeep-owner Stellantis has also paused production at some Canadian and Mexican assembly plants.

As with other global carmakers, the UK industry was struggling even before Trump’s tantrum tariffs and earlier in the week the Starmer government finally softened demands on automakers to switch to production of EVs. The government’s new measures include a reduction in fines car manufacturers must pay if they cannot comply with EV sales targets (and will also exempt micro-volume manufacturers, including Aston Martin, Bentley and McLaren). Although the 2030 phase-out date for new petrol and diesel cars will remain unchanged at 2030, full hybrid and plug-in hybrid vehicles and cars, like the Toyota Prius and Nissan e-Power, will be able to be sold until 2035. While overall EV sales rose last year, they were driven by commercial buyers, with only one in ten individual car buyers choosing to go electric. In March, EVs made up 19% of sales – well short of the 28% that carmakers would have needed to achieve in 2025 to meet the government’s EV mandate. However, the sector has warned that it needs to go further to protect it from the collateral damage emanating from tariffs. It is estimated that the UK exports more than one million vehicles, valued at US$ 9.79 billion, to the US – most of which are in the luxury and premium market segments.

There were mixed results from the latest annual financials from Tesco, with revenue, excluding VAT but including fuel, 2.5% higher at US$ 90.61 billion, in line with market expectations, whilst there was a 3.2% dip in profit before tax at US$ 2.85 billion. The leading supermarket chain has said it plans to slash a further US$ 649 million in costs, as it deals with the fall-out from Rachel Reeves’ October budget with the 1.2% rise in employers’ national insurance contributions to 15.0%, (costing Tesco an extra US$ 305 million), and the increase in the minimum wage, as it tries  not only to cushion the blow of Rachel Reeves’s tax increases but also to invest in fighting a price war with rivals. The only person who could not see that these moves would result in loss of jobs, and higher prices in shops, seems to be the Chancellor herself. The country’s number one grocer budget expects a tumultuous year, ahead as the battle for customers intensifies and a price war with its rivals. A further share buyback of US$ 1.88 billion, to be completed by April 2026, has been announced by Tesco, with US$ 974 million from free cash flow and the balance of US$ 909 million, funded by the sale of its banking operations.

Some more good news for the embattled Starmer administration, that following zero growth in January, February witnessed the UK economy growing strongly, at 0.5%, and 0.6% for the quarter ending 28 February; analysts were looking at a 0.1% expansion. The main drivers were widespread growth across both the services and manufacturing industries with construction activity, the production sector and the services sector all heading north by 0.4%, 0.3% and 3.0%.

This week, EY was fined US$ 6.32 million, by the Financial Reporting Council, for its sub-standard role in its 2017 and 2018 audits of Thomas Cook; it beggars belief that it has taken seven years to finalise this matter. The amazing aspect of the fine is that EY received a 25% discount, from the initial US$ 8.43 million, for admissions and early disposal! Its audit engagement partner, Richard Wilson, was fined US$ 136k. The FRC concluded that “EY and Mr Wilson have each admitted serious breaches of standards relating to the work performed on two important areas of the financial statements: goodwill impairment and going concern, as well as failing to adequately consider a risk to EY’s independence during the 2018 audit”.

With the principal aim of creating a business that could better compete with industry giants, such as the French conglomerates LVMH and Kering, and amid a global sector slowdown, Italian fashion house Prada has acquired Versace, from Capri Holdings, in a US$ 1.40 billion deal. Prada will now be running a business, with revenues of over US$ 6.86 billion. In 2018, Capri paid US$ 2.1 billion to acquire Versace, which was previously 80% family-owned and 20% by the US investment fund BlackRock. Because of market turbulence arising from the tariffs, Capri, which also owns Jimmy Choo and Michael Kors, had hoped to sell at US$ 1.60 billion and has had to take a US$ 200 million haircut to see the deal through. Last month, Donatella Versace stepped down as creative director after more than thirty years – a move brought on ahead of the sale, in what was widely seen as a prelude to the deal; she had taken over that position in 1997, following the murder of her older brother, Gianni, who had founded the Milanese company in 1978.

Virgin Australia came clean this week by admitting to a huge mistake that has seen 61k customers overcharged, by an average of US$ 34, in the five years ending March 2025; the total sum involved is a rather paltry US$ 2.1 million. The airline has notified the ACCC and will work with the regulator on any additional actions necessary. The overcharges occurred when changes were made to their itineraries, with “some bookings were repriced in a way that does not align with our policy and, we are refunding all impacted guests for that amount.” Deloitte has been appointed to manage the claims process, which will be open for twelve months. The ACCC said it is assessing whether the remedial actions taken by Virgin are suitable and what penalties to charge. (Qantas reached a US$ 74.3 million agreement with the ACCC to settle a lawsuit against the airline for selling seats on flights that had already been cancelled in 2024).

Prime Minister Anthony Albanese was quick off the blocks to rebuff a Chinese approach for Australia to “join hands” against Donald Trump’s tariffs, as Washington escalates its trade war with Beijing. Two facts probably decided the problem– one was the approach of an Australian general election early next month, (and the fear of a voter backlash), and the other was that Australia was facing a US import tax of 10%, whilst China, Australia’s biggest trading partner, was at the end of tariffs totalling 125%. The White House recently imposed an import tax of 10% on Australian goods, but for China – Australia’s biggest trading partner – it raised tariffs to 125%. China had argued that joint resistance was “the only way” to stop the “hegemonic and bullying behaviour of the US”, with the Prime Minister responding that Australians would “speak for ourselves”, while the country’s defence minister, Richard Marles, said the nation would not be “holding China’s hand”, and “it’s about pursuing Australia’s national interests, not about making common calls with China”. Earlier in the week, the Australians confirmed that it would not retaliate and would be having further negotiations with the White House.

Wednesday saw Nvidia shares surge 18.7%, to $114.33, but later close on US$ 112.58, on news that the Trump administration had reportedly reversed its decision to impose restrictions on Nvidia’s H20 AI chip exports to China; it appears that the US president recently had dinner with the company’s CEO, Jensen Huang, at Mar-a-Lago. As per the Forbes’ Real-time Billionaires List, Huang was back on the super billionaire’s list, after a US$ 15.5-billion jump in his wealth to US$ 100.1 billion. This chip is the firm’s most advanced AI processor that can still legally be sold in China, under current US export rules, and there is a sense that the administration may have changed its tune, with Nvidia having reportedly committed to new US investments in AI data centres. In Q1, ByteDance, Alibaba, Tencent, and other tech giants placed orders worth at least US$ 16 billion, with the demand fuelled by the rise of cost-efficient AI models from Chinese startup DeepSeek. But it has not been plain sailing, as exemplified by the wealth of its CEO which has shrunk US$ 30 billion YTD.

With March declines in both global cereal and sugar prices offset by a marked increase in vegetable oil prices, the Food and Agriculture Organisation of the United Nations posted that its Food Price Index, a benchmark of world food commodity price developments, remained largely unchanged on the month. The index averaged 127.1 points – 6.9% higher than in March 2024 but still 20.7% below its March 2022 peak. Section-wise, the various FAO Price Indices registered the following in March:

• Cereal             2.6% and 1.1% lower on the month and the year; wheat prices dipped, despite currency movements moving higher; maize and sorghum prices declined in February and sunflower oils all rose, driven by robust global import demand
  • Rice                 1.7% lower on the month; driven by weak import demand and ample exportable supplies
  • Vegetable Oil 3.7% and 23.9% higher on the month and the year; palm soy, rapeseed, sunflower oils all rose, driven by robust global import demand
  • Meat               0.9% and 2.7% higher on the month and the year; driven by higher pig meat prices in Europe after Germany regained foot-and-mouth-disease-free status and the strengthening of the euro against the greenback
  • Poultry Meat  stable; despite the continued challenges posed by widespread avian influenza outbreaks in some major producing countries
  • Dairy               lower global cheese prices offset by higher prices for butter                                                              and milk powders
  • Sugar              weaker global demand along with recent rainfall in southern Brazil and deteriorating production prospects in India

Swiss bank UBS estimates that there will be a 10% to 12% increase in the prices of goods that come from Vietnam – where Nike produces 50% of its shoes. BBC have done a simple exercise showing by how much its Nike Air Jordan 1, first produced for use by Michael Jordan in November 1984, would be impacted by the tariffs; most of its products are sold in the US. On ‘Liberation Day’, it was announced that the likes of Vietnam, Indonesia and China would face some of the heaviest US import taxes – between 32% to 54%. The former, whose exports account for 90% of the country’s GDP, got clobbered with a 46% levy.

                                                                        Pre-Tariff                     Post-Tariff

• Factory Cost in Vietnam                 US$     20 – 30            US$     20 – 30
• Shipping & Fees to US                   US$        4 – 6             US$        4 – 6
• Import Duty into US          14%    US$        3 – 6   46%   US$     9 – 17
• Total Cost                                      US$     27 – 42            US$     33 – 53
• Retail Price                                     US$   120 – 150          US$   120 – 150          

This simple table shows that the variance between the landed price in the US and the retail price in the shop is between US$ 93 and US$ 108 (pre-tariff), which could be recorded as gross profit and between US$ 87 – US$ 97 (post-tariff, assuming no retail price increase). From the US$ 93 – US$ 108 gross profit, other stakeholders – including the wholesaler, the retail distributor, state tax entities, ‘marketing’ and maybe consumers, (having to bear some extra cost) – have to take their cut. Assuming the direct costs of Factory and Shipping remain constant, the tariff has increased direct costs by between US$ 6 – US$ 11 per pair of Nike Air Jordan 1 trainers. The fact that Nike’s shares fell 14% the day after the Trump’s announcement, based on the effect they could have on the company’s supply chain, seems to be a case of over-reaction.

As from last Saturday, 05 April, U.S. customs agents had begun collecting the unilateral 10% tariff on all imports from many countries, including, Australia, the UK and the UAE, with higher levies on goods from fifty-seven larger trading partners due to start 09 April. A U.S. Customs and Border Protection bulletin to shippers indicated no grace period for cargoes on the water at midnight on Saturday. However, there was a fifty-one-day grace period for cargoes loaded onto vessels or planes and in transit to the US before 12:01 am ET Saturday, but they need to arrive by 12.01 am ET on 27 May to avoid the tariff. Last Wednesday, the same process took place for Trump’s higher “reciprocal” tariff rates of 11% to 50%, including EU, Chinese and Vietnamese imports being hit with 20%, 54% and 46% tariffs. There are exclusions, including a list of 1k products, valued at US$ 645 billion, such as crude oil, petroleum products and other energy imports, pharmaceuticals, uranium, titanium, lumber and semiconductors and copper. Furthermore, Canada and Mexico are exempted because they are still subject to a 25% tariff related to the U.S. fentanyl crisis for goods that do not comply with the US.-Mexico-Canada rules of origin; there are also exclusions for goods – such as steel/aluminium, cars, trucks and auto parts – subject to separate, 25% national security tariffs.

On Monday, US Treasury Secretary Scott Bessent had posted that more than fifty nations had started negotiations since Donald Trump announced sweeping new tariffs, simultaneously defending levies that wiped out nearly US$ 6 trillion in value from US stocks last week as well as downplaying economic backlash. There was no mention of the identity of the fifty nations, but by then, Zimbabwe and Israel had cancelled such levies on US imports whilst Taiwan’s President Lai Ching-te, announced zero tariffs, as the basis for talks with the US, pledging to remove trade barriers and saying Taiwanese companies will raise their US investments; Bessent noted that “he’s created maximum leverage for himself.” He also commented there was “no reason” to anticipate a recession based on the tariffs, citing stronger-than-anticipated US jobs growth.

Trump on Wednesday slapped a 10% baseline tariff on all imports to the US, along with heavy levies on tech production hubs such as China, Taiwan and Vietnam, deepening a selloff triggered by concerns about AI spending that had pushed Nasdaq into correction territory earlier last month.

There is no doubt that many will understand the position the US President is in and his reasons to try and level the ‘trading playing field’. The country’s trade deficit widened 12.2% in 2022 to nearly US$ 1 trillion as Americans bought large volumes of foreign machinery, pharmaceuticals, industrial supplies and car parts. The US last had a trade surplus in 1975, and now the current 2024 current account deficit had widened by US$ 228.2 billion, (25.2%), to a record US$ 1.13 trillion, equating to 3.9% of GDP, 0.6% higher on the year. In comparison, the UK had a US$ 98 billion current account deficit, (2.7% to GDP), whilst the EU showed a current account surplus of US$ 361 billion (equating to 1.9% of GDP). Maybe Donald Trump is right when he says, “we have been the dumb and helpless ‘whipping post,’ but not any longer. We are bringing back jobs and businesses like never before,” and that “this is an economic revolution, and we will win,” adding “hang tough, it won’t be easy, but the end result will be historic.”

Markets just do not dramatically fall without a reason and there are many so-called experts out there who opine that that the current stock market drop is as a direct result of the tariffs which in turn will have a knock-on impact on higher inflation, rising unemployment and a slowing economic growth environment. Indeed, JPMorgan’s latest estimates see US GDP declining by 1.0% to 0.3%, with unemployment 1.1% higher at 5.3%.

All the global markets have become nervy on fears of a recession as indicated by the US bourses posting probably their biggest one-day falls seen since the pandemic. Once doubt enters Wall Street, the rest of the world takes action as investors flee riskier assets on genuine and realistic fears that tariffs could spark a trade war – and push the world into a man-made recession. Analysis of FTSE All World data by the investment platform AJ Bell last Thursday, 03 April, put the value of the peak losses among indices at US$ 2.2 trillion – it saw the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average down 5.8%, 4.3% and just under 4% at the height of the declines.  Australian shares suffered their worst week since June 2022, as nearly US$ 70 billion was wiped off the All-Ordinaries index on Friday. The ASX, having fallen 11.0%, (including 3.9% last week), since its all-time high in mid-February, has now entered into ‘technical correction” territory. The tech-heavy Nasdaq Composite index is in a bear market on Friday, after the index fell 20% lower from its 16 December 2024 record high of 20,174 points. (One definition of a bear market is when an index closes down at least 20%, from its most recent record high finish). Last Friday it ditched a further 3.8%, after China announced retaliatory action by adding 34% tariffs on US goods. Even before the Donald Trump Show, Nasdaq had been corralled into correction territory last month following concerns about AI spending that had pushed Nasdaq into correction territory earlier last month. The S&P 500 Index was nearing to confirming a bear market, trading 14.9% lower on its 6,144 points high, whilst the Dow was on track to confirm a correction, having posted a 10% drop from its record closing high.

Tech was the big loser from the spillover in the global markets. Apple was one of the main casualties, mainly because China, (facing an aggregate 54% tariff) is home to its major manufacturing production base; since the Trump announcement, it has lost 12.5% of its market cap. Over the same period the likes of Amazon, Meta, Nvidia, Alphabet and Microsoft have seen their share values lower by 13.3%, 12.6%, 11.2%, 5.3% and 4.6%. Notwithstanding the tariff impact, other factors have seen Tesla shares plummet 37% of its value.

The Magnificent Seven stocks include:

• Apple                           US$ 3.05 trillion
• Microsoft                    US$ 2.79 trillion
• Nvidia                          US$ 2.50 trillion
• Amazon                       US$ 1.91 trillion
• Alphabet                     US$ 1.84 trillion
• Meta Platforms           US$ 1.37 billion
• Tesla                           US$ 860 billion

An Exchange Traded Fund tracking the Magnificent Seven stocks, that have been mainly responsible for recent Wall Street record levels, had slumped about 27% from its December all-time high. Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values. The “danger” stocks, taking the hits, were from big energy, with Brent crude oil shedding US$ 6.19 (9.7%), last week, to close on US$ 65.67. Financial stocks were worst hit with Asia-focused Standard Chartered bank enduring the worst fall in percentage terms of 13%, followed closely by its larger rival HSBC.

Tariff-stunned markets started Monday facing another five days of potential confusion and uncertainty after the worst week for US, (and most global), stocks since the onset of the Covid-19 crisis five years ago. Analysts said that Trump may have a preference to propose aggressive tariffs in order to extract quick concessions in their negotiations. Monday and Tuesday witnessed further slumps in the markets. There were two scenarios doing the rounds – it was part of the US President’s strategy to crash the markets so as to pressure the US Federal Reserve to cut interest rates. The other was that the aggressive approach was simply a negotiating tactic that could lead to the tariffs being eased through quick concessions by other countries. Commerce Secretary Howard Lutnick suggested that it could be the latter, saying the tariffs would remain in place “for days and weeks.”  Markets continued heading south whilst the number of nations wanting to do a deal with the White House was moving to triple digits. (One hundred and eighty nations and territories have been impacted by hit by reciprocal tariffs). It had been reported that US Treasury Secretary Scott Bessent met with Trump in Florida on Sunday, who urged him to emphasise striking trade deals with partners in order to reassure the markets that there is an endgame to the US strategy. Furthermore, he asserted that the pullback had been the plan all along to bring countries to the bargaining table.

In the perfect Trump World, there would be trade equality but that was never going to happen, and the President would have known that. It could be that he was willing to let the markets go even lower, (that would help in another of his aims – to see interest rates lower), but that the increase in bond yields, that makes borrowing more expensive, and the fall in the greenback, may have pushed him to introduce a ninety-day reprieve. He had made a point and had most of the free world knocking on his door to discuss new improved trading relations for the US.

Thirteen hours after they came into force, and in typical Trump style announced a ninety-day pause for his “reciprocal” tariffs everywhere. On the news of his policy change, of a tariff reprieve – excluding China which was hit with an extravagant 145% – but still maintaining a 10% baseline tariff rate, (against all trading partners outside of Canada and Mexico), global shares rose sharply, (except for China) and a global bond sell-off stabilised. The remaining tariffs remain:

• a 25% tariff on steel and aluminium
• a 25% tariff on imported vehicles and certain auto parts
• Canada: 25% on most goods that don’t comply with the US-Mexico-Canada Agreement
• Mexico: 25% on most goods that don’t comply with the US-Mexico-Canada Agreement

Since the 02 April “Liberation Day”, when the S&P was trading at 5,633,  before it fell 11.5% to 4,983 on 08 April and three days later recovered 7.6% to end today’s trading at  5,363 today Similarly the figures for the Nasdaq Composite were 17,601, down 13.3% to 15,268 and recovering 9.5% to 16,724; the Dow Jones Industrial Average was 42,225, down 10.8% to 37,646 and recovering 6.8% to 40,213. Over the period 02 April to 11 April, the three bourses have seen falls of 4.8%, 5.0 % and 4.8%. On 02 April, the greenback was trading at 1.09 to the euro, then at 1.10 on 08 April, rising to US$ 1.14 today. In the short run, Trump will see advantages in a temporary weak dollar, currently down to market volatility and waning confidence, with a flight to other safe haven currencies, (such as the Swiss dollar), and gold.

Today’s sell off in the bond market ended probably the most volatile week since the pandemic, with yields surging and investors fleeing to safe haven assets such as gold which hit a record high US$ 3,238 and safe-haven currencies. Long-term Treasury yields hit the roof, with ten-year yields topping 4.59% – 72bp higher than the 3.87% posted on Monday, 07 April.

The ninety-day reprieve gives everyone breathing space. Donald Trump will be looking at finalising as many agreements, as he can, to reduce the US trade deficit to what he considers a fair level. In normal circumstances, this will result in a stronger dollar, a growing economy, increased US investment in industry/infrastructure and lower long-term Treasury yields. His other mission is to settle with his “friend”, Chinese Xi Jingpin, whilst he keeps up the pressure on the number two provider of US imports.  Trump has commented that “there’ll be fair deals. I just want fair. There will be fair deals for everybody.” Time will tell! There is no doubt that Trump has shaken the global trading to its core and, with such drastic changes, he was bound to upset the world order to its core. Until 08 July, expect international trade, the markets and global Treasury bonds to be in a hectic state of Helter Skelter!