President Trump’s decision to increase tariffs on industrial metals and violate the terms of the Iran nuclear deal may lead to heightened inflation, delays in business and a jump in oil prices, according to a statement released by Credit Suisse.
‘Over a month after the US first announced plans for tariffs, details remain unclear,’ said Nelson Louie, global head of commodities for Credit Suisse Asset Management.
‘An outright trade war could be inflationary, as supply shocks may reverberate into associated industries. This may result in delays in business decisions until there is more clarity.’
The statement noted that the industrial metals sector gained 3.52% in April. According to the bank, aluminium rose the most after US sanctions against one of the world’s largest aluminium producers, Rusal, reduced supply expectations.
The bank also said it had observed a 5.02% jump in the energy sector over the past month. It said that this was due to heightened expectations that the US would back out of the Iran nuclear deal, which would limit the potential for Iranian exports.