U.S. February PMI: Services Expansion Accelerates, with Inflation Pressures Keeping Rising

Data Interpretation

Summary:

The recently released U.S. PMI data for February indicates continued expansion in the services sector. While the business activity index experienced a slight decrease, it remains within the growth territory. New orders and employment indices have rebounded, and inflationary pressures have intensified. Supplier deliveries have slowed, and corporate confidence in future growth is influenced by tariffs and government policies.

The ISM PMI data released on March 5 indicates:

The U.S. ISM Services PMI for February registered 53.5, up from the previous reading of 52.8, marking the eighth consecutive month of expansion.

The U.S. ISM Services Business Activity Index for February registered 54.4, a slight decrease from the previous reading of 54.5.

The U.S. ISM Services New Orders Index for February registered 52.2, up from the previous reading of 51.3, signaling an acceleration in order growth.

The U.S. ISM Services Employment Index for February registered 53.9, up from the previous reading of 52.3, reaching a five-month high.

The U.S. ISM Services Prices Index for February registered 62.6, up from the previous reading of 60.4, suggesting increased inflationary pressures.

The latest PMI report indicates a marginal increase in the U.S. services sector PMI to 53.5 in February, signaling continued expansion within the sector and supporting overall economic growth. Although the business activity index experienced a slight decrease, the rise in new orders and employment indices suggests ongoing improvements in demand.

Regarding new orders, surveyed firms generally reported robust domestic market demand, with some businesses front-loading orders in anticipation of potential tariff impacts. However, companies expressed concerns about uncertainties surrounding government trade policies, with some export orders being affected by tariff issues.

In terms of the labor market, the services sector employment index climbed to 53.9, reaching a five-month high. Businesses are continuing to increase hiring to meet the demands of business expansion. Nevertheless, certain industries remain impacted by government spending cuts and policy uncertainties, leading some companies to postpone hiring or reduce employee working hours.

In terms of the inflation, input costs continued to rise, with the services sector price index increasing to 62.6, the highest level since March 2023. Companies widely reported rising labor, fuel, and raw material costs. While some costs have been passed on to consumers, competitive pressures have limited businesses' ability to fully raise prices.

The most recent ISM Services PMI survey indicates that order growth has accelerated, order backlogs have expanded, and the business activity index remains elevated, all of which contribute to the robust expansion in the services employment index. While the employment sub-index does not provide specific details on the magnitude of monthly job growth, it offers some insights into the upcoming February non-farm payrolls, suggesting continued labor market resilience.

Looking ahead, corporate confidence in the economic outlook is influenced by policy uncertainties. Government spending cuts, tariff policies, and fluctuations in market demand remain key risk factors. However, some businesses anticipate a rebound in growth in the coming months as markets adjust and policies become clearer.

Overall, the U.S. February PMI data indicates a steady pace of expansion in the services sector, persistent inflationary pressures, and improvements in the labor market. Future economic performance will continue to depend on policy adjustments, shifts in market demand, and the effectiveness of inflation control measures.

U.S. February PMI

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Daily News

[Quick Facts]

1. Canada is unwilling to lift retaliatory tariffs on the United States if President Donald Trump leaves any U.S. tariffs on Canada.

2. Federal Reserve's "Beige Book": Economic activity up sightly but consumer spending was down.

3. Trump grants 1 month exemption for US automakers from new tariffs on imports from Mexico, Canada.

4. Trump's tariffs drive US physical market aluminum premiums to record high.

5. Bernanke: The world's recent experience of faster inflation may make it harder for central banks to control prices in future.

6. Mexico's government may look for other trade partners after the United States slapped tariffs on its southern neighbor.

7. Bailey: The Labour government's payroll tax increase will lift prices in the UK.

8. Oil prices drop amid OPEC+ production lift and concerns over Trump's tariffs.

9. The US ISM Services PMI unexpectedly increased in February, employment index hit 3-year high.

[News Details]

Canada is unwilling to lift retaliatory tariffs on the United States if President Donald Trump leaves any U.S. tariffs on Canada

Canadian Prime Minister Justin Trudeau is unwilling to lift Canada’s retaliatory tariffs on the United States if President Donald Trump leaves any U.S. tariffs on Canada, a senior government official said. The Trudeau government is lukewarm about the "middle ground" solution to the trade war proposed by US Commerce Secretary Howard Lutnick. A Canadian official, speaking anonymously, clarified that Trudeau won’t accept a scenario requiring full tariff revocation. The issue involves US tariffs.

Federal Reserve's "Beige Book": Economic activity up sightly but consumer spending was down

On March 5 local time, the Federal Reserve released its National Economic Situation Survey report. Compiled based on the latest surveys of 12 regional reserve banks (i.e., 12 districts) under the Federal Reserve, this report is also known as the "Beige Book". The report shows that U.S. economic activity has risen slightly but unevenly since mid-January. Six Districts reported no change, four reported modest or moderate growth, and two noted slight contractions. Consumer spending was down. The report shows that consumers have a strong demand for necessities but are more price-sensitive for non-necessities, especially among low-income consumers.

Trump grants 1 month exemption for US automakers from new tariffs on imports from Mexico, Canada

On March 5 local time, White House Press Secretary Levitt said that the US would grant a one-month tariff exemption for any cars imported through the US-Mexico-Canada Agreement. On March 3 local time, US President Trump said that the 25% tariffs on Mexican and Canadian goods would take effect on March 4. Trump reiterated during a speech at a joint session of Congress on the 4th that reciprocal tariffs would start to be imposed on April 2.

Trump's tariffs drive US physical market aluminum premiums to record high

US President Donald Trump is planning to restore 25% tariffs on aluminum imports from March 12. Price premiums for aluminum on the physical market in the United States have surged to a record high. Buyers on the physical market usually pay the London Metal Exchange benchmark aluminum price plus a premium which typically covers taxes, transport and handling costs. The US Midwest duty-paid aluminum premium at above 40 US cents a lb or nearly $900 a metric ton is up nearly 60% since the start of 2025.

Ultimately, the US is a net importer of aluminum … Producers will not want to pay the tariff, they will try to pass on as much as they can to consumers. The premium may have to rise to near 47 cents a lb to fully account for a 25% levy. Analysts said aluminum produced in countries where import levies apply is likely to be diverted to Europe, where the duty-paid physical market premiums has dropped to 11-month lows at $240 a metric ton, down 35% since the start of 2025.

Bernanke: The world's recent experience of faster inflation may make it harder for central banks to control prices in the future

The world's recent experience of faster inflation may make it harder for central banks to control prices in the future, former US Federal Reserve Chair Ben Bernanke said. Businesses may find it easier to raise prices, consumers may show less resistance, people may become more sensitive to inflation, and their expectations may also adjust accordingly. At the same time, central bank governors may be more vigilant about another spike in prices."

Mexico's government may look for other trade partners after the United States slapped tariffs on its southern neighbor

Mexico's government may look for other trade partners after the United States slapped tariffs on its southern neighbor. Mexican President Claudia Sheinbaum said that Mexico may shift its trade alliances "if necessary", referring to the situation where tariffs may continue to be imposed. Sheinbaum said at her daily morning press conference that she is tentatively scheduled to have a phone call with Trump regarding tariffs on Thursday. Sheinbaum said that if the tariffs continue to be implemented after that, Mexico will reach out to Canada and other countries.

Bailey: The Labour government's payroll tax increase will lift prices in the UK

Andrew Bailey, Governor of the Bank of England, explained in a letter to Meg Hillier, Chair of the Treasury Select Committee, how the £26 billion ($33.4 billion) increase in National Insurance contributions announced in the October budget is expected to affect the economy. Bailey said that the Labour Party government's increase in payroll tax will drive up UK prices by up to 0.2% in the next year. Last month, the Bank of England raised its forecast for the peak inflation rate by 1 percentage point, expecting it to reach 3.7% later this year. Half of this is due to regulated price changes, such as rising water bills and the increase in National Insurance contributions. According to the February forecast of the Monetary Policy Committee, the increase in employers' National Insurance contributions contributed between 0.1% and 0.2% to 1% upward revision of the consumer price increase forecast.

Oil prices drop amid OPEC+ production lift and concerns over Trump's tariffs

Oil prices tumbled to their lowest level in over three years as trade-war-related uncertainties dragged down the prospects of the global economy and energy demand. Brent crude oil fell more than 3%, breaking below $69 and hitting its lowest level since December 2021. Traders speculated about the duration and nature of the tariffs the US imposed on its two major trading partners, Canada and Mexico. At the same time, OPEC+ countries are proceeding with production lift as planned, intensifying concerns about oversupply.

The US ISM Services PMI unexpectedly increased in February, employment index hit 3-year high

Data released by ISM showed that the US ISM Services PMI index in February was 53.5, higher than the expected 52.5% (the previous reading was 52.8%). Regarding other data:The employment sub-index rose for the third consecutive month, reaching 53.9%, hitting a new high since December 2021. Strong demand has driven the robust employment data.

The index measuring the cost of paying for materials and services rose to one of the highest readings since early 2023. The high price index highlights the challenges faced by the Federal Reserve in further curbing inflationary pressures.

New order index rose to 52.2% and inventories index returned to expansion at 50.6%.

Overall, the latest ISM Services PMI survey shows that order growth has accelerated, order backlogs have expanded, and the business activity index is at a relatively high level. These also explain the strong growth of the services employment index. Although the employment sub-data do not specify the exact magnitude of employment growth, this index provides some clues to the February nonfarm payrolls to be released later this week, indicating that the labor market remains resilient.

[Today's Focus]

UTC+8 14:45 Switzerland's unemployment rate in February

UTC+8 18:00 Eurozone retail sales in January

UTC+8 21:15 ECB's interest rate decision in March

UTC+8 21:45 ECB President Lagarde holds a monetary policy press conference

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Americans have been warned to brace for higher prices within days of Donald Trump pulling the trigger on Monday, imposing US tariffs on goods from Canada and Mexico and hiking tariffs on China.

Global stock markets came under pressure again on Tuesday, with leading indices falling sharply – and the benchmark S&P 500 losing all its post-election gains – as Canada, Mexico and China vowed to retaliate, and investors balked at the prospect of an acrimonious trade war.

US retail giants predicted that prices were “highly likely” to start rising on shelves almost immediately after a 25% duty came into effect on exports from Mexico to the US.

Most Canadian exports to the US also now face a 25% duty, with a 10% rate for energy products. The Trump administration imposed a 10% levy on all Chinese exports to the US last month, which has now been doubled to 20%.

Trump, who won back the White House after pledging repeatedly to bring prices down, has acknowledged that his controversial trade strategy could lead them to rise. Consumers could face “some short-term disturbance”, the president conceded last month.

With US retailers relying heavily on imports from Mexico and Canada to stock their shelves, top executives claimed they would have no choice but to increase prices.

Target, for example, relies heavily on Mexican produce during the winter months, and fruit and vegetable prices in its stores could rise as soon as this week, according to Brian Cornell, its CEO.

“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” Cornell told the news network CNBC, pointing to produce including strawberries, avocados and bananas. “If there’s a 25% tariff, those prices will go up.”

The consumer electronics retailer Best Buy said it expected the new tariffs to make their way along its supply chain. “We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely,” CEO Corie Barry told investors.

The Trump administration defended its moves. “There may well be short-term price movements,” the commerce secretary, Howard Lutnick, told CNBC. “But in the long term, it’s going to be completely different.”

Trump, meanwhile, wrote on Truth Social, his social network: “IF COMPANIES MOVE TO THE UNITED STATES, THERE ARE NO TARIFFS!!!”

The US’s largest trading partners have already hit back. Canada retaliated overnight with its own tariffs on US exports worth C$30bn ($20.71bn), from orange juice to motorcycles, and threatened to impose tariffs on a further C$125bn ($86.29bn) wave of US goods later this month.

China plans to hit US farm products including chicken, beef, wheat and corn with 15% tariffs from next week. Mexico pledged to lay out its response on Sunday.

Trump threatened to hit back against Canada’s retaliation, suggesting the US will match any Canadian tariffs on US products with US tariffs on Canadian products.

On Wall Street, the S&P 500 fell 1.22% and the Dow Jones industrial average fell 1.55%. The FTSE 100 retreated 1.27% in London.

Justin Trudeau, the Canadian prime minister, said: “Because of the tariffs imposed by the US, Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs.”

Claudia Sheinbaum, the Mexican president, argued there was “no reason, rationale or justification” for tariffs to be imposed.

The Nova Scotia premier, Tim Houston, called Trump a “shortsighted man” who “wields his power just for the sake of it”. In a statement soon after the tariffs went into effect, Houston said it was “impossible to properly describe the uncertainty and chaos” that the trade war was causing for Canadians.

In neighbouring Newfoundland and Labrador, staff at the province’s liquor stores were ordered to pull all American products. “Now, more than ever, we should be supporting local and Canadian-made products where possible,” the outgoing premier, Andrew Furey, said.

The Bloc Québécois leader, Yves-François Blanchet, called the United States an “economic predator” and warned the province’s vast resources of timber and metals were at risk. “Americans will suffer inflation, isolation, distrust and lies,” he said.

Source: Theguardian

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Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin may struggle to move above $94,000 after its failed attempt to reclaim the price level two days ago, Bitfinex analysts say.

“Any recovery to take the price back above $94,000 might face significant resistance,” Bitfinex analysts said in a March 3 markets report. Bitcoin fell below $94,000 on March 2 and has yet to bounce back.

Strong spot Bitcoin market sell-pressure nulls Trump gains

The Bitfinex analysts linked this prediction to the recent volatility following US President Donald Trump’s March 1 announcement pledging a crypto reserve, which saw Bitcoin quickly surge 12% from $85,000 to $95,000.

However, the analysts said that intense selling pressure in the Bitcoin spot market has already erased most of those gains. With Bitcoin currently trading at $87,190, a move back to $94,000 represents an almost 8% increase, as per CoinMarketCap data. Bitcoin Will Face ‘Significant Resistance’ Reclaiming $94K: Analysts_1

Bitcoin Will Face ‘Significant Resistance’ Reclaiming $94K: Analysts_1

Bitcoin is down 7.12% over the past 30 days. Source: CoinMarketCap

The consensus among crypto analysts for Bitcoin’s price in the short-term appears uncertain, with no apparent signs that the downtrend is over or strong signals of an emerging uptrend.

Pseudonymous crypto trader Rekt Capital said in a March 4 X post that while “history suggests the bottom may very well be in on this downside deviation,” further downside remains a possibility.

Rekt said that while Bitcoin may see some form of price stability around the range low of $93,500 over the coming days, it does not mean that the price won’t “downside deviate” below $93,500 again.

Volatility to reign until genuine buyers enter market

Crypto analyst Axel Adler said in a March 4 X post it was a “good sign” that buyers “bought up” Bitcoin when it recently tapped $81,000.

Meanwhile, MN Trading founder Michaël van de Poppe said, “Honestly, I think we’ll need to wait until this week is over as there’s a lot of macro-economic data & events.”

The US Consumer Price Index (CPI) for February is set for release on March 12, one week ahead of the next Federal Reserve interest rate decision on March 19.

Master Ventures founder Kyle Chasse recently said Bitcoin’s price will continue to experience volatility until genuine buyers start entering the market rather than traders seeking arbitrage opportunities.

The Crypto Fear & Greed Index, which measures market sentiment, shows a score of 20 in the “Extreme Fear” category, where it has been since Feb. 25.

Source: Cointelegraph

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Warren Takunda

Economic

The Euro-to-Dollar exchange rate broke through a key resistance level at 1.0530 on Tuesday and is extending gains on Wednesday.

The impetus follows news that Germany is preparing to amend its constitution to allow it to invest more in defence and infrastructure.

The existing coalition of the Greens, CDU/CSU and Chancellor Olaf Scholz's SPD are looking to quickly push through a constitutional change to allow greater spending in infrastructure and defence.

This is because the incoming government won't have the three-quarters majority in the Bundestag required to enact constitutional changes.

Currently, spending is constrained by the debt brake that says no more than 0.35% of GDP can be borrowed.

A provision would exempt defence spending above 1% of GDP from the "debt brake" that caps government borrowing, allowing Germany to raise an unlimited amount of debt to fund its armed forces and to provide military assistance to Ukraine.

Proposed changes will also allow the next government to launch a €500BN infrastructure fund to invest in priorities such as transportation, energy grids, and housing.

All this points to a fundamental shift in Germany away from fiscal austerity to greater spending, which would boost growth.

"Fiscal austerity is out of favour. Austerity had unnecessarily burdened Europe and exacerbated the private sector's deleveraging," says Mathieu Savary, BCA Research’s Chief European Strategist.

The rally in the euro confirms that markets agree.

"European fiscal policy could all be enough to lead EUR/USD to break the critical 1.0530 level," says David S. Adams, a strategist at Morgan Stanley. "A break here would correspond with the DXY breaking the 106 level, confirming a technical downtrend and allowing other USD-crosses to break their corresponding range bottoms."

Above: EURUSD breaks above a key resistance point.

Morgan Stanley maintains a 'long' EUR/USD trade that targets a move to 1.08.

The developments come amidst an acceleration of the U.S. Dollar downtrend that is linked to fears the U.S. economy will buckle under President Trump's volatile decision-making and punitive tariffs.

The major surprise of the week so far has been the Dollars slump on confirmation that tariffs on Canada and Mexico would proceed, shattering a long-held view that tariffs are unambiguously good for the Dollar.

Investment banks are revising forecasts for the Euro vs. the Dollar, saying they no longer see it falling to parity in 2025.

Prominent names include Goldman Sachs, MUFG Bank and TD Securities.

Goldman Sachs forecasts Euro-Dollar at $1.01 in six months, weaker than current levels, but stronger than its previous call for $0.97.

MUFG Bank Ltd says, "we are no longer showing EUR/USD forecasts below parity given our view that by end-Q2 the US economic slowdown will be more apparent and by then the Fed will have possibly cut the fed funds rate again."

Source: Poundsterlinglive

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Warren Takunda

Economic

Global growth concerns have shot back onto the radar of financial markets as weakening U.S. economic data and growing trade tensions hurt consumer confidence and business activity.

Although recession is not the base-case scenario for economists, given underlying U.S. resilience, recent data has unnerved investors and U.S. President Donald Trump's new 25% tariffs on Mexico and Canada are exacerbating growth concerns.

A shift in the mood music is apparent across markets.

Oil prices are at their lowest since October , stocks from New York to Tokyo are retreating from recent multi-year highs and two-year U.S. Treasury yields are at their lowest since October as bond investors see increased chances of near-term rate cuts.

"One thing is essential for an economy and that's confidence, which has taken a hit," said Francois Savary, chief investment officer at Genvil Wealth Management, referring to weakening U.S. consumer and business sentiment.

"I don't think it's (recession) a done deal but it's a reason why we have decided to decrease (U.S.) equity exposure."

Whisper It and It's Back: Recession Risk Creeps Onto Markets' Radar_1

Chart shows a rise and recent fall in shares

U.S. consumer confidence in January slumped the most in 3-1/2 years, retail sales dropped by the most in nearly two years, and Monday's U.S. manufacturing activity data showed big falls in new orders and employment.

"We don’t think we will see a (U.S.) recession but we do see a modest growth slowdown," said Joost van Leender, senior investment strategist, at Van Lanschot Kempen Investment Management in Amsterdam, adding consumers were feeling uncertain about "chaotic" U.S. policy.

And now, a slowing economy that the Atlanta Fed is forecasting to lose 2.8% in the first quarter.

Van Leender said he had trimmed U.S. equity holdings in late January and is overweight Treasuries as yields are likely to fall as the economy decelerates.

Highlighting the change in fortunes, the Atlanta Fed's GDPNow model estimate for annualised growth this quarter on Monday fell to -2.8% from +2.3% a week ago.

Analysts stress that recent U.S. data is likely to have been skewed by one-off factors such as cold weather, and strong imports in the case of the Atlanta Fed's model. But they also note that a trade war means focus is quickly shifting from inflation to the growth risks from U.S. tariffs.

China has responded to a doubling of duties on Chinese goods to 20% with additional tariffs of 10%-15% on certain U.S. imports from March 10. Europe is also in the firing line for higher U.S. tariffs, and trade-vulnerable auto stocks dropped 4% on Tuesday after the tariffs on Mexico and Canada, where many cars for the U.S. market are made.

Morgan Stanley estimates that the new U.S. tariffs on China, Mexico and Canada could shave 0.7-1.1 percentage points off U.S. economic growth in coming quarters, deliver a 2.2 to 2.8 percentage point hit to Canadian growth, and push Mexico into recession.

Canadian Chamber of Commerce CEO Candace Laing warned that U.S. tariff policy was forcing Canada and the U.S. toward "recessions, job losses and economic disaster".

"Time to add a new word to the dictionary, 'Trumpcession', SEB economist Marcus Widén said in a note.

RATE CUT PRESSURE

The Canadian dollar and Mexican peso briefly hit one-month lows on Tuesday. Notably, the dollar, which has generally benefited from trade tensions, has also weakened as U.S. growth worries weigh .

Some reckon the U.S. economy could be at risk from a worrying mix of sluggish growth and relentless inflation.

Analysts said a trade war keeps pressure on central banks globally to keep cutting rates to shore up growth. Traders are now pricing in 75 basis points of U.S. rate cuts by year-end versus just one cut in mid-January when data was strong.

After ending February with their biggest monthly drop since late 2023, 10-year U.S. Treasury yields are eyeing 4% .

"The bond market is moving towards pricing a soft patch and maybe a recession," said Forvis Mazars chief economist George Lagarias.

The European Central Bank is tipped to cut rates again on Thursday and Morgan Stanley said it expects another cut in April as economic data and inflation weaken.

Whisper It and It's Back: Recession Risk Creeps Onto Markets' Radar_2

Line chart showing the Fed rate and the ECB deposit rate and the market implied rates for both for Jan. 15 and March 4.

Even if U.S. economic data improves, analysts said the cloudier outlook was reason enough to remain cautious on equities.

Hedge funds that had snapped up global equities have fled bullish bets and put on wagers that stocks would decline, a Goldman Sachs note on Monday showed.

Consumer discretionary stocks, an economic bellwether and indicator of shoppers' purchasing power for nice-to-have products, was the worst-performing U.S sector last month, the note showed.

Friday's closely-watched U.S. jobs report takes on additional significance with growth risks in focus.

"This economic cycle is consumption-led and can only die with the labour market," said Lombard Odier's chief economist Samy Chaar. "The Fed has to be very mindful of that."

Source: Reuters

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Justin

Economic

Oil prices fell further on Wednesday, adding to a roughly 3 per cent drop in prices so far this week, as the market reacted negatively to new US tariffs that could hinder economic growth and Opec+'s plan to boost output starting next month.

Brent, the benchmark for two thirds of the world’s oil, was trading 0.24 per cent lower at $70.87 a barrel at 12.06pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 0.64 per cent at $67.87 a barrel.

A planned 25 per cent US tariff on Mexican and Canadian goods went into effect on Tuesday, alongside an additional 10 per cent duty on Chinese imports.

Canada and Mexico are two of the largest crude suppliers to the US market. Oil exports from Canada face a lower tariff of 10 per cent.

“In the near term, US tariff news is likely to keep oil prices volatile, with further potential temporary price setbacks,” Giovanni Staunovo, UBS strategist, said in a research note on Tuesday.

Oil prices also slid on the prospect of Opec+ adding more barrels to the market in the coming weeks.

On Monday, the alliance of producers said it would proceed with a “gradual and flexible” unwinding of voluntary production cuts of 2.2 million barrels per day (bpd) starting on April 1, adding 138,000 bpd per month until September 2026.

The planned return of production cuts – originally made by eight Opec members, including Saudi Arabia, Russia, the UAE, and Iraq in November 2023 – had been pushed back three times amid concerns about growing supply in the market.

Before the announcement, there had been growing speculation in the market that Opec+ would delay plans to increase production amid uncertainty on the impact of tariffs and US sanctions on Russia, Iran and Venezuela.

Analysts said the move could further exacerbate an oil market glut expected this year. “Fundamentally, we see the oil market heading into a surplus this year. The market mood is cooling from overly bullish readings, and the downswing in sentiment should add to pricing pressures in the near term,” said Norbert Rücker, head of economics and next generation research at Julius Baer.

The International Energy Agency has forecast a 1.6 million bpd increase in crude supply this year, far exceeding the projected demand growth of 1.1 million bpd.

“The announcement from Opec+ will be negative for oil in the short term, particularly as it coincided with plans from the US government that it will impose tariffs on Canada, Mexico and China and could follow up with plans for wider-ranging reciprocal tariffs or duties on EU goods,” Emirates NBD said in a research note on Tuesday.

US President Donald Trump has announced plans to impose reciprocal tariffs on April 2 against countries he believes are treating the US unfairly.

The US is the world’s second-largest trading nation, behind China, with more than $7 trillion in exports and imports of goods and services.