Category Finance News

Recep Tayyip Erdogan’s unpredictability is one of the few things both his supporters and critics agree on. Over two decades as prime minister and president, he has often made abrupt, consequential decisions with little warning.

Still, the March 19 arrest of Istanbul mayor Ekrem Imamoglu—widely seen as Erdogan’s chief rival and the opposition CHP’s likely candidate in the 2028 presidential race—shocked even seasoned observers. The charges, widely viewed as politically motivated, triggered mass protests, arrests, a media crackdown, and a ban on public gatherings.

The investor fallout was swift. “Billions fled Turkey on the news, and once again investors have learnt to fear the unexpected from Ankara,” said Charlie Robertson, emerging markets analyst at FIM Partners. Within days, Turkey’s stock market plunged, the lira tumbled, and by March 24 the Central Bank of Turkey (CBT) had burned through $26 billion trying to stabilize the currency.

Many were left wondering whether the crisis would derail the anti-inflation strategy being carefully pursued by Finance Minister Mehmet Simsek, Vice President Cevdet Yilmaz, and the CBT, which had successfully restored international confidence after the erratic policies before 2023. Financial officials have tried to steady nerves, saying policies would remain unchanged.

Muhammet Mercan of ING Bank says it’s important to keep things in perspective. He notes that the CBT responded to the volatility with a comprehensive strategy, including initiating lira-settled FX forward sales to address FX demand, raising the ON lending rate to 46%, suspending one-week repo auctions and issuing liquidity bills with maturities of up to 91 days.

“The Lira was the most attractive carry trade opportunity in emerging markets, leading to significant long positions by foreign investors, which were largely unwound. Nonetheless gross reserves of $171 billion as of March 14 remain sufficiently robust,” he says, arguing that the CBT possesses the tools to maintain FX stability.

Mercan is forecasting 2025 inflation of 28.4% and growth of 3.2%, but admits the recent volatility—compounded by the challenges added by US President Trump’s economic policies—“has increased the downside risks to the growth outlook.”

South Africa’s banking industry found itself in an uproar the night of March 16, when the heir apparent of its largest bank—and the continent’s—quit to take the helm of a crosstown rival.

Kenny Fihla, group deputy CEO of Standard Bank, CEO of its South African unit, and considered next in line to succeed CEO Sim Tshabalala, resigned that night; next day, he was named group CEO of rival Absa Bank.

Stung by the unexpected move, Standard Bank dispatched Fihla on paid leave until June 13, shortly before he is to assume his new position. In a statement, the lender admitted that his departure was a “heavy blow.”

Over a two-decade career at Standard Bank, Fihla rose to head its flagship corporate and investment banking division, where he presided over a doubling of headline earnings to R20.5 billion ($1.1 billion). Last September, he was appointed group deputy CEO.

His decision to jump ship is a major plus for Absa Bank. Under the stewardship of interim Group CEO Charles Russon for the past six months, Absa is hoping for stability at the corner office after a prolonged period of turmoil.

“Kenny is a recognized leader with substantial Pan-African banking experience, has relationships across the banking and financial ecosystem, and a proven track record to drive results in complex environments,” Sello Moloko, Absa board chairman, said. Fihla, who will take over on June 17 subject to regulatory approval, has a tough job ahead.

Considered a sleeping giant, Absa posted a 5% decline in headline earnings for the first half of last year. It rebounded in the second half, closing the year with a 10% increase, to R22.1 billion. Return on equity posted marginal growth, from 14.4% in the first half to 14.8% in the second half of the year.

While the bank posted growth across all business units, including its regional operations, the rate of growth has been sluggish. Case in point is the number of customers, which increased by a mere 4% to 12.7 million across its 10 markets. Corporate and Investment Banking, a critical unit, posted 6% growth in earnings. Fihla, whose appointment has thus far been received with enthusiasm, has committed to bringing a new dynamism to Absa, promising “forward-thinking strategies.”

Namibia marked a milestone in its history on March 21, when Netumbo Nandi-Ndaitwah was sworn in as the country’s first female president. At 72, she joins a small group of female African national leaders, following Ellen Johnson Sirleaf (Liberia), Joyce Banda (Malawi), and Samia Suluhu Hassan (Tanzania), all of whom attended her inauguration.

Nandi-Ndaitwah secured 57% of the vote, defeating her main rival, Panduleni Itula of the Independent Patriots for Change (IPC), who garnered 26%. Itula, a former member of the Southwest Africa People’s Organization (SWAPO), struggled to unseat the ruling party, which has held power since Namibia gained independence in 1990. SWAPO, founded in 1960, has been the dominant force in Namibian politics for over 64 years. The election, marred by a controversial three-day voting extension, faced opposition protests, but Nandi-Ndaitwah’s victory stood, reaffirming SWAPO’s grip on power despite its declining voter base.

One of her first moves was a cabinet reshuffle, reducing the number of ministers from 21 to 14 and giving it a female majority for the first time, with eight women and six men. The move signals a push for gender inclusivity and, her supporters hope, greater governance efficiency and economic stability.

Nandi-Ndaitwah’s leadership will be tested as Namibia faces major economic and social challenges, including a 30% unemployment rate, 46% youth joblessness, slow GDP growth, and a rising 71% debt-to-GDP ratio. She finds herself with a tall order: to create jobs, tackle inequality, and drive economic reforms.

El Salvador’s Stock Exchange (BVES) is the first in Latin America to offer digital assets. Digital Exchange, BVES’ digital arm, will provide products after receiving the go-ahead from the National Commission for Digital Assets (CNAD) to be a digital asset provider.

BVES claims it is the first regional stock exchange to establish a platform dedicated to the custody, issuance, management and trading of digital assets.

Rolando Duarte, president of BVES, said in a statement, “With Digital Exchange, we position ourselves at the forefront of financial innovation. Our mission is to provide market participants and local and international investors with a transparent and accessible platform that reflects the future of global finance.”

El Salvador has forged ahead with a plan to modernize finance in the region. It has recognized Bitcoin as legal tender (although this has since been rescinded), offered to headquarter a Central American stock exchange and crypto firm Tether, and drafted specialist legislation for alternate financial vehicles.

BVES acknowledges the assistance of Koibanx, which specializes in tokenization and blockchain infrastructure. The 2022 Digital Asset Issuance Law is the basis for the 39 registered asset providers in the country.

One of the first tests for Digital Exchange will be the tokenization of the Guatemala Interoceanic Consortium. Using the COINGT digital asset, the group wants to finance $325 million to unite the Atlantic and Pacific oceans, which will be achieved via ports, rail and a multimodal transport megaproject. The finance will be used in two tranches to pay for land acquisition, move the current plot owners, and pay suppliers. Ultimately, the consortium hopes to have a 231-mile property from Jutiapa to Ciudad Barrios.

“We are paving the way toward a digital financial ecosystem,” says BVES executive director Valentín Arrieta, “Digital Exchange opens the doors to new financial opportunities, connecting companies, institutional clients, and natural investors with the possibilities offered by digital assets, positioning the Exchange as a leader in innovation in the region.” According to a CNAD report, more than $5 billion in digital asset issuances were approved in 2024.

Marcia Hook and Ty’Meka Reeves-Sobers, partners with global law firm Clifford Chance, assess the changing outlook for energy producers and investors.

Global Finance: How has the outlook for the energy industry shifted under the new US administration?

Marcia Hook: Under the Biden administration, we saw significant investments in the US energy space. The business was booming, there was a lot of excitement from a range of investors, and that was bolstered significantly by the incentives under the IRA [Inflation Reduction Act of 2022] and a number of other favorable economic factors.

Now we are in a place where what will happen with the IRA is unclear, which is undoubtedly one of the major drivers of the boom we saw over the last two years. A lot of people are waiting for the uncertainty to die down; because at the end of the day, the energy industry is one that thrives on certainty.

Investors make investment decisions on the timescale of decades, not years. And these investments are sometimes in the billions of dollars. Right now, we see a lot of folks—both investors in the US and investors abroad—essentially holding and waiting until they have a little bit more certainty on what will happen with the IRA in particular.

Ty’Meka Reeves-Sobers: With the global clients, we’re seeing more requests and inquiries for interpretive guidance. They ask, “What does this mean?” We’re trying to read the tea leaves and find some certainty to add some balance there. It really is a game of wait and see, because every day something new happens, and I find that we’re really just trying to stay on top of it.

GF: Given the demand for new data centers, is it likely the Trump administration will take a few steps back and keep in place some of the measures approved by the prior administration?

Hook: This is an area near and dear to my heart because it’s at the intersection of power and data centers. There’s a huge projected growth in energy demand, and a lot of that is attributable to data centers. It becomes a practical question: “How do you put that much power on the system this quickly?” And realistically, would the administration take direct, adverse actions against renewable energy?

From a practical perspective, even if the administration were to try and do that, renewables may be the most realistic way to meet that demand in the needed time frame.

There’s a lot of excitement about, for example, SMRs [small modular reactors] and other types of nuclear units coming back online, potentially. But the permitting timeline and the deployment timeline for that is more like the end of this decade at best. So realistically, renewables are still the best answer. Solar is the fastest to deploy. People in the renewable space are still very bullish.

To be clear, there probably does have to be an all-of-the-above approach. We will need more gas-fired facilities as well. I’m not saying that those projects are not part of the solution; but certainly, even if the administration were to strip away all of the renewables credits, I don’t know that we’d see all of these projects just evaporate. There’s still the need, and they’re still the fastest solution.

Reeves-Sobers: It’s going to be a toolbox of solutions. It’s not going to be one-size-fits-all. In the meantime, I think the operators are taking it upon themselves to come up with other creative solutions to that problem.

GF: Other countries are not moving away from renewables and environmentally responsible projects. Is that likely to change?

Hook: Outside the US, we generally see a trend to continue pursuing renewable energy resources. That being said, I think that there are some practical constraints globally to meeting all of the new power needs through renewable energy. So, much like in the US, I think that there are some practical considerations that might drive countries to consider gas and even coal, in some cases, as part of the all-of-the-above strategy to get enough power in the time frame that’s needed. While we haven’t seen anyone specifically turn away from renewables, I suspect that it’s possible we’ll see an uptick in nonrenewable sources, just because of the practical need to provide so much power.

GF: Are we seeing an increase in interest in the nuclear industry?

Hook: There’s certainly an increased interest in nuclear power, both on the side of the administration and in the private sector; and we are seeing facilities that are discussing recommissioning or essentially coming out of retirement. The best known is the Microsoft-Three Mile Island deal, where Three Mile Island [a power plant near Middletown, Pennsylvania, that in 1979 was the scene of the worst commercial nuclear accident in the US] will be brought back online to serve the Microsoft [energy] load.

There’s a lot of excitement in the nuclear community right now. People are very bullish on it. There’s a lot of attention to SMRs as well. It will take some time to deploy nuclear; and as we heard reported about the Microsoft-TMI deal, it is a pricey resource to contract with. But these facilities run continuously for very long stretches of time without needing any maintenance, so it’s quite attractive.

GF: There is a lot of chit-chat about how law firms are using big data analysis and AI to make some of their corporate practices more efficient. What is your experience?

Reeves-Sobers: At least from an environmental perspective, the more information, the better, because it clears up some of the unknowns that come with environmental liability. And that’s always better when you’re thinking about an investment and whether you want to pull the trigger on any particular project.

Hook: More information is better; more data is better. I would point to two discrete impacts. One is being able to find potentially material issues for valuation purposes much more easily. And then, two, just the efficiency in doing so.

There is now a platform, EnerKnol, that we use regularly to aggregate the regulatory filings and issuances from every US public utility commission, the Federal Energy Regulatory Commission, the Department of Energy, and every major government agency including the Environmental Protection Agency.

In the past, when I was a younger lawyer, if I had wanted to conduct due diligence on an entity that has operations across the US, I would have to go to every state website and use their sometimes-antiquated search functions—and it’s very challenging in those instances to find material issues. Now, we can go to one platform and search everything. And then on top of it, this platform is experimenting with AI tools to try and make it even better. I’m very optimistic about the ways that AI and other technological developments will improve our ability to advise our clients in the US.

GF: How does the current climate affect M&A and consolidations, not just in the energy sector but in others? Do you see a freeze?

Hook: It’s an interesting time because there’s certainly still M&A activity going on. The expectation is that M&A activity will increase, because there will be market participants looking to exit various investments or projects that they were developing. The sense that I’ve gotten from speaking to folks in the industry is the expectation that it will be a buyer’s market, whereas maybe three years ago it was more of a seller’s market.

We do expect to see an uptick in M&A activity. I’m not quite sure what the timescale for that is, because we’re still seeing it. I don’t know that there’s been a significant uptick yet, but that is certainly the expectation.

Political opposition stalls US momentum in green investing, while Japan takes the lead with GX bonds and a long-term financing strategy.

Japan’s commitment to ESG principles remains steadfast, even as major economies diverge in their approaches. While the United States grapples with an ESG backlash marked by legal challenges and political resistance, Japan is doubling down on its green initiatives, notably through the issuance of Green Transformation (GX) bonds.

Japan has emerged as a leader in climate transition finance, becoming the first country to issue sovereign transition bonds in February 2024. These five-year Climate Transition JGBs raised 100 billion yen (about $680 million), with subsequent auctions planned for 2025, underscoring the government’s dedication to funding decarbonization projects. The Ministry of Finance highlighted that these bonds align with the Paris Agreement’s goals and are designed to support industries in hard-to-abate sectors.

“Japan is taking an evidence-based approach to ESG, focusing on science-based targets and transparency,” said Hiroshi Tanaka, an ESG analyst in Tokyo. “The GX bonds are a clear signal of our commitment to sustainable growth.”

While Japan accelerates its ESG efforts, the United States faces growing skepticism. Over the past few years, conservative lawmakers and political figures have pushed back against ESG investing, arguing that it puts social or political goals ahead of financial performance. States like Texas and Florida have enacted legislation to restrict the use of ESG criteria in state-managed investments. Lawsuits targeting ESG-related disclosures and investment practices have surged, fueled by concerns over fiduciary duty and political polarization. A recent report from Harvard Law School noted that litigation risks have become a significant deterrent for US companies pursuing ESG strategies.

“In the US, ESG has become a political football,” said Sarah Miller, a corporate governance expert. “The backlash reflects deeper ideological divides and fears of overregulation.”

In contrast, Japanese policymakers view ESG as a long-term economic imperative rather than a partisan issue. “For Japan, ESG is not just about compliance; it’s about creating value for future generations,” Tanaka said.

Japan’s approach aligns closely with that of the European Union, where ESG remains central to regulatory frameworks like the Corporate Sustainability Reporting Directive (CSRD). Both regions emphasize transparency and accountability in climate-related disclosures. However, the US has seen efforts to roll back ESG initiatives at both state and federal levels.

A recent Forbes article highlighted this divergence: “While Europe and Japan are embedding ESG into their economic systems, the US is witnessing a retrenchment driven by political opposition and legal challenges.”

Despite global headwinds, Japan appears undeterred in its ESG journey. The government plans to expand GX bond issuance and encourage private-sector participation in sustainable finance. Experts believe this proactive stance will position Japan as a global leader in climate transition efforts.

“Japan’s strategy is pragmatic yet ambitious,” said Tanaka. “It recognizes that achieving net-zero emissions requires both public and private investment.”

As the world navigates complex ESG dynamics, Japan’s commitment offers a stark contrast to the turbulence elsewhere, especially in the US. Whether this divergence will widen or converge remains an open question.

From the establishment of its earliest banks in the mid-19^th century to becoming one of the world’s most advanced financial hubs, Singapore’s banking evolution mirrored the country’s journey from a modest colonial entrepôt for the trade between Asia, Europe, and then the United States to one of the world’s wealthiest and most developed nations. 

Formerly a British colony, Singapore turned to its banks to power its economic growth and transformation after becoming a sovereign country in 1965. Banks provided credit to businesses and entrepreneurs, financed infrastructure projects, and fostered financial inclusion. 

Today, Singapore’s financial system boasts a robust regulatory framework and cutting-edge fintech innovations. The Lion City has also emerged as a leader in sustainable finance, promoting green banking practices and investments that support environmental and social goals.

These are the leading banks in Singapore listed alphabetically, each with its own distinctive strengths and unique history.

Citibank Singapore 

Founded in New York in 1812 as City Bank of New York, Citibank’s roots in Singapore trace back to 1915, when it acquired the International Banking Corporation (IBC), which was established at the start of the century to facilitate trade between East Asia and the United States. Over the following decades, Citibank became a force in Singapore’s banking landscape, helping its transformation from a trading center to a global financial powerhouse. A full-service bank, Citibank pioneered products like credit cards and 24-hour ATMs, and catered to consumers, corporations, and institutions with an extensive portfolio of financial offerings.

In recent years, however, the bank’s traditional branch model has undergone a major overhaul. In 2020, the bank opened in Singapore its largest global Wealth Hub in the region, and in 2024 it closed its last regular branch in Jurong East to focus primarily on high-net-worth clients and online financial services.

https://www.citibank.com.sg

Development Bank of Singapore 

Singapore had only just recently declared its independence when, in 1968, a small group of government officials and entrepreneurs created the Development Bank of Singapore (DBS) with the goal of supporting the newborn country’s economic development. In the years and decades that followed, they fulfilled that mission. DBS funded projects spanning all major industries, helped the public listing of some of Singapore’s most iconic brands (Rollei, Singapore Airlines, and Singtel, to name a few), and even financed the construction of what were then the tallest building and the tallest hotel in the nation. Not only that, during the 1980s, the bank introduced a share ownership program that allowed employees to become stakeholders and rolled out a housing loan initiative that made home ownership more accessible. In 1997, ahead of its competitors, it launched the region’s first comprehensive internet banking platform.

Today, DBS is the largest retail and commercial bank in Singapore with assets of about $450 billion, and maintains a presence in 18 markets globally, providing services for individuals, small and medium enterprises, along with corporate, wealth, and investment banking. The Development Bank of Singapore has won numerous Global Finance awards, including in the Best Private Banks and Best Corporate/Institutional Banks categories.

https://www.dbs.com.sg/

Hongkong and Shanghai Banking Corporation

Best known by its acronym HSBC, the London-based Hongkong and Shanghai Banking Corporation is one of the largest banks and financial services companies in the world, serving more than 40 million personal, wealth, and corporate customers in about 60 countries and territories. 

In 1877, HSBC opened its first office in Singapore, where it had conducted business through an agency since 1865. In those early stages, the Hongkong and Shanghai Banking Corporation extended loans to Chinese merchants and funded the import, export, and entrepôt trade of spices and raw materials. In the early 20^th century, its focus shifted to primarily financing tin and rubber exports, which at the time constituted 35% of Singapore’s total export trade. HSBC also played an important part in the reconstruction and rehabilitation of Singapore’s economy after the Second World War, handling one-third of Singapore’s foreign and trade exchange business by 1948. 

Ever since, HSBC has continued growing with Singapore and Singapore with HSBC. As a regional leader, HSBC offers comprehensive solutions, including retail, commercial, private, and investment banking, as well as wealth, insurance and capital market services, to its clients in the Lion City and across Asia.

https://www.hsbc.com.sg

Maybank Singapore

As the first bank from Malaysia to operate in the country, Maybank’s entry into Singapore in 1960 played a key role in improving cross-border financial operations between the two neighbors and across the region as a whole. Today, the Maybank Group has an international network of over 2,600 branches in 18 countries including all 10 ASEAN nations, with more than 42,000 employees serving customers worldwide.

Locally incorporated and identified by the Monetary Authority of Singapore (MAS) as one of the systemically important banks operating in the country, Maybank Singapore holds assets of about $60 billion and employs approximately 2,000 people. It offers an extensive range of products and services for individuals, businesses, and corporations, including investment banking, asset management and stock-broking, insurance, and takaful. Its presence across Southeast Asia allows the bank to provide clients with seamless cross-border financing and support their overseas investment ventures.

https://www.maybank2u.com.sg

Oversea-Chinese Banking Corporation

On October 31, 1932, three banks—the Chinese Commercial Bank, Ho Hong Bank, and the Oversea-Chinese Bank—merged and consolidated their strengths to form Oversea-Chinese Banking Corporation (OCBC). Since then, OCBC Bank has grown into one of Singapore’s leading financial institutions and the second-largest financial services group in Southeast Asia with assets close to $500 billion, catering to millions of customers through its more than 400 branches and representative offices in 19 different countries.

With a special focus on the ASEAN region and the Greater China clientele, OCBC Bank offers a wide range of products and services, including retail banking, wealth management, and insurance.

A leader in online banking and in providing innovative solutions for its customers, in 2024 OCBC Bank also brought digital banking aimed at children aged 7 to 15, who can now have their own bank account and debit card and improve their financial education. The Oversea-Chinese Banking Corporation has won many Global Finance Awards, most recently for Best SME Bank in the Asia-Pacific region and for excellence in the Sustainable Finance category.

https://www.maybank2u.com.sg/

Standard Chartered Singapore

Then known as the Chartered Bank of India, Australia, and China, Standard Chartered opened its first branch in Singapore in 1859, and has since contributed to its development by facilitating trade, supporting local businesses, and driving financial growth. Officially a London-based multinational bank, Standard Chartered does not operate in the United Kingdom and derives almost all of its profits from operations in Asia, Africa, and the Middle East. Furthermore, its largest shareholder is the Singaporean state-owned multinational investment firm Temasek Holdings. 

With an entire range of financial services across personal, business, corporate and private banking, alongside wealth management, investment banking, and treasury services, Standard Chartered has contributed to the transformation of the country into the world-class financial and commercial center that it is today.  

Its contribution, however, goes beyond the business and trade domains. To promote community involvement, Standard Chartered grants its employees three days of annual leave for volunteer work. Additionally, the bank sponsors the Singapore Marathon, also known as the Standard Chartered Marathon, which attracts approximately 60,000 runners from all over the world each year since 1982.

https://www.sc.com/sg

United Overseas Bank

Alongside the Development Bank of Singapore (DBS) and Oversea-Chinese Banking Corporation (OCBC), United Overseas Bank is one of the three big local banks in Singapore. 

UOB offers a broad spectrum of financial services, from personal banking essentials like savings, loans, and credit cards, to insurance services, trade and corporate finance, and wealth management for high-net-worth clients. Over the years, United Overseas Bank has earned many honors from Global Finance, most recently winning the coveted award for Best Bank in Asia-Pacific and in Singapore for 2024.

In the second part of Global Finance’s conversation with former US Secretary of Commerce Wilbur Ross—who served during President Trump’s first term—the discussion shifts to the impact of Trump’s tariffs and trade policy on CEOs, CFOs, and key trading partners like Canada, Mexico, and India.

Global Finance: What would you recommend to CEOs and CFOs navigating this climate of uncertainty due to US tariffs and trade policy as they determine their near- and long-term strategies?

Wilbur Ross: Yes, reshoring and nearshoring were some things that would develop momentum in any event. President Trump is going to accelerate that.

Whatever plan people had for relocating production, it would be wise to accelerate it. Now, whether that means moving operations to Mexico or the US, that’s another question. But the days when a company could make one component in one country, a second in another, and a third in yet another—then bring them all to a fourth country for assembly—are ending.

Therefore, it should be more of a question of to what degree you relocate facilities and whether or not to do so, and to a degree where to relocate them. The rules of origin will be much more important to Canada, but particularly to Mexico, than before. So, as long as one incorporates that into their thinking, I think relocation is the wise move to make.

GF: Is the message different for CEOs and CFOs outside the US?

Ross: Yes, it could be if they adopt policies similar to Trump’s. We are moving toward an era where what has been called “protectionism” becomes much more of a centerpiece of everyone’s trade policy. But what Europe must do to be effective is to deregulate some. The regulatory burden that European governments impose on their companies is a real impediment to reshoring. Europe has become too intrusive in the business community.

Trump has also said he will require his cabinet members to cancel an even higher ratio of existing regulations relative to any new ones they implement—higher than what we had the first time. The first time, you were required to cancel two for each one you put in. He may be pushing for as many as eight, but certainly more than two. That’s one thing.

Tax policy is the other thing. You have to look at Trump’s trade activities in the context of what he is doing overall. Between deregulation and reducing corporate taxes, he’s changing the economic attractiveness of being in the U.S. regardless of tariffs. And then when you load on top of that, a bit sturdier tariff policy, you have a combination of factors that will prove very powerful.

GF: Which means that you also think this will be the outcome of the current situation?

Ross: Okay, well, there will naturally be a lag. You can’t build a new facility of any size in 10 minutes. There may be some near-term dislocation as we face higher tariffs, but we don’t yet have the increased production to offset them.

Now, that’s not a universal problem. Many of our industries operate at only 70–80 percent capacity. Therefore, not only will they be able to meet increased demand, but this will also help them absorb part of the tariff on imported components. When production increases from 70 or 80 percent capacity, the marginal costs are very small. You’ll have that factor and probably another factor—currency readjustment. How that plays out will have an important impact on how well industries do globally in each area.

To that end, if U.S. Federal Reserve Chairman Jerome Powell is slow to reduce interest rates while Europe moves at a faster pace, that will clearly have implications for currencies.

One of my concerns for Europe is that if they lower interest rates too quickly relative to the U.S., it could have real impacts on their currency. That would hurt imports but help exports. If I were a European manager, I would be more eagle-eyed than ever about the outlook for currency fluctuations.

GF: Looking at the various industry sectors, are there sectors that deserve tariffs? Are there also sectors that should not see tariffs in these negotiations?

Ross: Well, I have focused more on those who might need it than those who might not. However, pharmaceuticals are a big import to the U.S. Since U.S. drug prices are already higher than others, I don’t think hefty tariffs on pharmaceuticals would be particularly well-fitting to our economy.

But they’re going in on the really big item—the automobile. Automobile manufacturing has caused a fair degree of factory expansion here and in Mexico. In the automotive industry, you must look at the U.S. and Mexico combined because of the concept of rules of origin. In those areas, it’s inevitable. So, I think you’re right—it will vary somewhat by industry. But for the most part, most manufacturing businesses probably don’t expect there will be more tariff burdens.

GF: Would large U.S. exporters, such as technology manufacturers, be affected negatively by this?

Ross: Well, Europe doesn’t have the technological content we have so far. The giant companies in Europe are not comparable to what we call “The Magnificent Seven” over here. Europe’s response seems to have been antitrust and tax complaints, trying to hold back American companies rather than doing things that would effectively build up a European champion.

GF: What of those U.S. industry sectors geared more toward exports? Are they at risk because of tariff reciprocity in the near term?

Ross: Well, apparel is a significant import from Asian countries, and it wouldn’t surprise me if that were to continue. Some of those brands, such as the European brand Zara, have become very, very powerful players in the US. It’s a Spanish company, but it mainly produces its material in Turkey. Meanwhile, Vietnam and Mexico have become big competitors in what we used to call sneakers. So, some things will remain there that will not be affected by the tariffs.

But remember, the real purpose of the tariffs—and one that I hope will be achieved long term—is to let the rest of the world know exactly what they must do to bring our tariffs down, namely, to bring down their own tariffs. The unexpected result of the new US tariff policy could very well be lower tariffs in the long term.

Take India, for example. India’s tariffs are extremely high on most products. Prime Minister Narendra Modi wants to industrialize India. It’ is a logical place to be competitive with China if they can meet their infrastructure needs, because Indians have very good quality manufacturing skills, technological skills, and engineering skills. They have a large population base, so there’s no reason they can’t compete. What’s been holding them back has been the need for more roads and railroads. You need things like that in the way of transportation infrastructure to be much more highly developed for India to flourish. There’s a good chance that PM Modi will do that.

Vietnam has already benefited greatly from the pressures being put on China, which will probably continue. However, Vietnam has a much smaller economy and population base, so it can’t remotely replace China.

Read Part 1 of Global Finance‘s interview with Wilbur Ross: