Trump’s trade tariffs could be America’s Brexit, Nomura’s Janjuah says

President Donald Trump’s recent announcement of sweeping tariffs on metals imports may be as globally significant as the U.K.’s 2016 decision to leave the European Union, one investment expert told CNBC Wednesday.

“It’s not the same, but it’s potentially the U.S.’ Brexit moment in many ways,” said Bob Janjuah, senior independent client advisor at Nomura. “And whatever you think of Brexit, it’s going to have a bit of an impact for a bit of a while, across the board.”

Markets were shaken at the end of last week when Trump announced that the U.S. would impose 25 percent and 10 percent tariffs on all steel and aluminum imports, respectively. The news was met with swift criticism both within Trump’s Republican party and around the world, as trade partners and allies threatened retaliation, prompting fears of a global trade war.

“I think for the U.S., the world’s core consumer, this isn’t just a U.S. issue. It’s a global issue,” Janjuah said.

Of the president’s decision, the Nomura advisor said that this was, after all, part of his campaign pledge to protect American industries.

“Mr Trump is kind of doing what he said he was going to do in the run-up to being elected. The market, I think, forgot that,” Janjuah said. “But if the market is already concerned about inflation and the Federal Reserve, trade wars, one of the takeaways from that is a bigger risk of inflationary low growth.”

Several experts have warned of the major risk to global growth if countries began a a tit-for-tat tariff battle and closed their doors to open trade. The EU, among others, has warned it will respond in kind, and is reportedly drawing up plans to impose 25 percent tariffs on $3.5 billion worth of U.S. goods.

The announced departure of Trump’s top economic advisor Gary Cohn, the most high-profile free trade advocate in the administration, marked another blow to the free trade agenda. Dow futures dropped more than 300 points on the news.

Supporters of Trump’s move, meanwhile, argue that trade relationships have been unfairly slanted against the U.S. for too long, creating trade deficits and wiping out American jobs. Critics meanwhile maintain that the move will protect the steel industry — which employs about 140,000 Americans and contributes $36 billion to U.S. GDP — at the expense of steel-consuming industries, which provide more than 6.5 million jobs and contribute $1 trillion to GDP, according to U.S. Census data.

Similarly to Brexit, the move has garnered opprobrium from allies and created yet more divisions within the government. A few European investors have already suggested they will delay investment plans in the U.S. as a result of the uncertainty.

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