Globalization is being reset by US President-elect Donald Trump’s trade tariff threats and concerns about regulatory arbitrage between Wall Street banks and their international rivals, senior bankers said on Tuesday, Reuters reported.
Trump said last month that he would impose 25 percent tariffs on all goods from Mexico and Canada and an additional 10 percent on goods from China on the first day of his second term, raising concerns about global trade relations.
However, Trump’s proposed tariffs would not significantly hurt Spanish bank BBVA’s business in Mexico, the bank’s chief executive Onur Genc told the FT Global Banking Summit in London.
“We are not worried at all,” Genc said.
“If the cost of labor in the U.S. is 100, in Mexico it’s 10… So you’re putting 25% tariffs on 10(%),” he said, adding that it meant the country would remain competitive.
BBVA is one of the most exposed to changes in Mexico’s competitiveness and economic growth after the imposition of tariffs on foreign lenders. BBVA Mexico is the market’s largest bank and accounts for 47% of the Spanish group’s revenue in 2023.
Trump’s proposed tariffs could disrupt supply chains around the world, but would also create opportunities for banks in Asia and the Middle East, Tanuj Kapilashramy, chief strategy and talent officer at Standard Chartered, said in response to a question at the same event.
For his part, European Central Bank governing board member Piero Cipollone said U.S. import tariffs could hurt economic growth and inflation in the 20 countries that share the euro.
Some experts are predicting a wave of financial deregulation on Wall Street during a second Trump term, adding to speculation that the “Basel endgame” rules designed to protect the global banking system from shocks will not be adopted in the U.S. at the same pace as in Europe.