Despite markets largely shrugging off renewed tariff threats from Donald Trump, the risk of a global trade war appears to be rising, according to AJ Bell.
Danni Hewson, head of financial analysis at AJ Bell, said markets had moved into “partial recovery mode” after Mr Trump said he would not use force to take Greenland, but warned the underlying issue remained unresolved.
“The Greenland issue isn’t going to go away,” she said. “Donald Trump may not be planning to use military might to get what he wants, but he’s more than happy to inflict economic pain as a means to an end.”
Ms Hewson noted there had been no reversal of US tariff plans due to take effect from early February against the UK and other European nations. While tariffs have often been used as a negotiating tactic by the Trump administration, she said it was unclear what concessions European leaders could realistically offer in this case.
“The risks of an all-out trade war look to be escalating, which markets seem to be shrugging off,” she said, pointing out that global equities have risen around 20pc since the so-called ‘Liberation Day’ tariffs were announced last April.
She added that trade tensions had resurfaced after the European Parliament postponed a vote to ratify its trade agreement with the US indefinitely, putting trade relations firmly back in focus.
