Welcome to our weekly editorial on everything geopolitics- and commodities!

We are approaching the “Liberation Day” on Apr 2 where we will (hopefully) get more clarity around the tariffs plans from Trump. We have recently seen a semi-u-turn from the Trump administration on the severity and depth of the reciprocal tariffs announced next week, and the base-case is a softer stance with some negotiated exemptions for big partners. 

This is also exactly what paves the way for a very decent comeback in US risk assets now, something that we expect to continue into April when the softened USD and slightly lower USD bond yields start feeding through via easier financial conditions.

Over working thesis has always been that the reciprocal tariffs were aimed at forcing outcomes on trade barriers from counterparts and we are already seeing such early signs of such counter-acts being mulled in India (lower barriers on cars), in the UK (a cut in the digital sales tax) and in the EU (lower tariffs on Cars and select agricultural goods). We won’t get there without noise and retaliations, but a reciprocal approach from the US, will most likely NOT lead to a race to the top, but rather the opposite, as the US is (one of the) countries on earth with the softest trade barriers.

Chart 1: Will softer financial conditions via a weaker USD feed through to risk assets in the US?