March 2018
March was a controversial month for the US as President Donald Trump implemented a range of measures designed to protect America’s interests. The US also announced plans to impose tariffs of up to US$60 billion on imports from China. China subsequently imposed its own set of tariffs, worth around US$3 billion on US exports to China.
- The Fed raised its key interest rate by 25 basis points
- The US economy grew by 2.9% YoY in Q1 2018
- President Trump signed a US$1.3 trillion spending bill, averting the risk of a shutdown
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March was a controversial month for the US as President Donald Trump implemented a range of measures designed to protect America’s interests. The International Monetary Fund (IMF) decried President Trump’s plan to levy tariffs on steel and aluminium imports of 25% and 10% respectively. The IMF warned that the tariffs are likely to damage not only countries outside the US, but also the US itself. The move also met with opposition from President Trump’s own Republican Party, as Paul Ryan – the Speaker of the House of Representatives – urged Mr Trump to “consider the unintended consequences” of the plan. Later in March, the US decided to temporarily exempt certain countries – Argentina, Australia, Brazil, Canada, EU member states, Mexico, and South Korea – from the tariffs. President Trump is set to rule by 1 May 2018 on whether their exemptions will be permanent.
“The IMF warned that tariffs are likely to damage not only countries outside the US, but also the US itself”
Later in the month, the US announced plans to impose tariffs of up to US$60 billion on imports from China. President Trump expressed his concern over the US’ trade deficit with China, and wants it to be reduced “immediately” by US$100 billion, citing China’s “unfair” methods. In response, China’s US embassy said that China “would fight to the end to defend its legitimate interests with all necessary measures”. China subsequently imposed its own set of tariffs on US exports to China, worth approximately US$3 billion.
Share prices fell in the US and around the world during March amid mounting concerns over the possibility of a damaging trade war. Although investors hope that the two countries will manage to renegotiate their trade agreements, the Dow Jones Industrial Average Index fell by 3.7% over the month, while the S&P 500 Index declined by 2.7%, and the Nasdaq Index fell by 2.9%.
The US Federal Reserve (Fed) increased its key federal funds rate by 25 basis points to a range of 1.5% to 1.75%. In the minutes of the Fed’s monetary policy meeting, Fed officials indicated that they stand ready to implement additional tightening into 2019 and 2020, if necessary.
The US economy expanded at an annualised rate of 2.9% during the first three months of 2018, compared with earlier growth estimates of 2.6% and 2.5%. President Trump signed a US$1.3 trillion spending bill during March, allaying fears of another government shutdown, but warned that he would never sign another like it.
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