Recent trade agreement developments, particularly a 15% tariff on European imports and a deal with Japan, are instilling market optimism about reducing trade war fears. These positive outlooks could potentially provide a broader agreement with China, impacting gold by reducing its geopolitical risk premium. However, longer-term risks continue to concern investors. Despite current optimism, there are warnings that tariffs could lead to higher prices and pressure on consumer sentiment, with companies facing growing costs yet currently absorbing them to remain competitive.
The Wall Street Journal Editorial Board has warned that the recent 15% tariff agreement with Japan could carry long-term strategic costs in the form of rising prices and mounting pressure on consumer and business sentiment.
U.S. companies are currently absorbing the costs of tariffs rather than passing them on to consumers, but these costs are expected to eventually translate into higher prices.
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