Tariff-fueled inflation will be one of the biggest market risks in 2025, Nicolai Tangen, head of the world's largest sovereign wealth fund, said on Tuesday.
“I don't think I should give any advice to the United States, but if you look at the risk to financial markets, I think inflation is certainly there and the cause of that is tariffs,” the CEO of Norges Bank Investment Management at the World Economic Forum in Davos told CNBC .
“Many of the suggestions currently coming from the United States are potentially inflationary in nature. They may cause more inflation. There may be less labor supply, there may be more tariffs – all this drives inflation, so it is not certain that inflation will fall,” he said.
Political leaders around the world are eagerly awaiting this news what trade policy after months of harsh rhetoric will be delivered by newly inaugurated US President Donald Trump.
Trump said Monday that he did is considering introducing 25% tariffs on Mexico and Canadatwo of the largest trading partners of the USA, at the beginning of February. He's had this before threatened tariffs of 50-60%. for Chinese goods and customs duties on imports from the European Union unless the bloc increases its purchases of US oil and gas.
Tangen Norges Bank also cited key risks to markets, including higher longer-term interest rates, high levels of public debt and geopolitical tensions. He cited the biggest risk as the concentration in U.S. stocks among large technology companies, which he said “have never been bigger.”
But he said that “purely financially” for many U.S. companies, Trump's arrival will be “very positive.”
“We wouldn't necessarily agree with many of these policies, but if we look at it just from a financial standpoint, as a financial investor, it's overall very exciting. You know, we have over half of our assets invested in America. And when we talk to American CEOs, and we talk to many of them, we really see the return of that animal spirit.”
Tangen heads the huge Norwegian sovereign wealth fund, which posted a profit for the first half of the year last year it amounted to CZK 1.48 trillion ($138 billion), mainly due to investments in shares of technology companies.