Brace yourselves. A full-blown trade war may be on the way

(Mar 7): In foreign exchange markets, investors aren’t waiting to find out if all the tariff threats being thrown around lead to a full-blown trade war.

Some money managers have begun piling into traditional havens like the yen; others are trimming currency exposure altogether; and even those who’re betting not much will come from the row are hedging just in case.

The concern is that President Donald Trump’s plan to impose steel and aluminium tariffs will trigger a wave of retaliatory levies that derail the worldwide economic expansion. The European Union has already responded, preparing punitive steps on iconic US goods should Trump go through with his threats. Gary Cohn’s resignation Tuesday drove home investors’ skittishness: The yen surged, while the peso and Canadian dollar sank.

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