Stocks Fall as Trump Announces Tariffs on Steel and Aluminum

[Zippyjuan]

https://www.cnbc.com/2018/03/01/mark...-just-did.html

President Donald Trump's plan to slap tariffs on foreign aluminum and steel could help U.S. producers, but it could also fuel inflation, slow the economy and trigger other retaliatory actions against U.S. industries, analysts said.

These fears weighed on stocks and the market sold off sharply after initially flip flopping amid confusion over whether there would be an announcement or not. But stocks sold off sharply when Trump surprised the markets and announced a 25 percent tariff on steel and a 10 percent tariff on aluminum.

"One of the largest fears we have is we've got tariffs. We could have trade wars and it could blow up NAFTA negotiations and nobody wins a trade war," said Art Hogan, chief market strategist at B. Riley FBR.

The Dow was down more than 500 points and the S&P 500 slid well below the key 2,700 level. The move was viewed as one of the most protectionist actions from the Trump administration, and it is one of his policies that has most worried markets, even as stocks have rallied on tax reform and his other pro-growth policies.

"Tariffs would probably have the unfortunate affect of both slowing growth and accelerating inflation, and that's not a good thing," said Ward McCarthy, chief financial economist at Jefferies. "For this economy, this is the worst possible time to be doing that."

While strategists said the possible tariffs on steel and aluminum did not signal a full-blown trade war, they could have the affect of creating trade skirmishes that could accelerate.

Dana Peterson, a Citigroup economist, said the use of tariffs for national security reasons is a centerpiece of Trump's trade policy and the use takes trade disputes into a new territory. "It certainly opens the door for other countries to claim the same thing," she said. "That's when trade wars begin."

The tariffs could result in higher prices for consumers on things like automobiles, as manufacturers pass on the higher costs of raw materials from abroad.

"It's going to take time to rebuild these industries," Peterson said. "You just can't reopen a smelting factory, especially if it was closed for years. It's going to cost something. You're going to have to hire people, pay them a competitive wage...it could be inflationary."

More at link.

[Aratus]

Zippy... Was this a 1000 point drop... a 700 point dip/correction ...or a mild 300 to 400 point reaction?

[Aratus]

Bitcoin went up to 20 grand and then dropped to just $10,ooo.oo

Herbert Hoover in his day slapped on high tariffs and triggered a tariff war.

[TheTexan]

American Steel, $#@! yea!

[dannno]

Over reaction..

[acptulsa]

The tariffs could result in higher prices for consumers on things like automobiles, as manufacturers pass on the higher costs of raw materials from abroad.

"It's going to take time to rebuild these industries," Peterson said. "You just can't reopen a smelting factory, especially if it was closed for years. It's going to cost something. You're going to have to hire people, pay them a competitive wage...it could be inflationary."

So, Zippy. Are you posting this because Trump allegedly shook Wall Street, because you don't think Americans should work producing steel or aluminum, or because you want something to blame future inflation on besides the Fed's policy of, 'We make money the old fashioned way--we print it!'

[specsaregood]

Heh, not mine. I'm up 9.6% on my steel related positions I bought a couple weeks back when Trump started talking about infrastructure and tariffs.

[oyarde]

Dow at 24, 584 . Gold 1320 . Next two months will tell on stocks , I would guess if they have not gained back losses by then not too likely to this yr . West Texas Light Sweet closed yesterday down about 2 1/4 percent to 61 and change , Brent Crude under 66 , one yr oil forecast was then still about 70 . Wholesale gasoline @ 1.76 . Copper 3.11 .

[Intoxiklown]

What I find curious is everyone is talking about the market in relation to the tariff announcement, and completely ignoring the report that showed consumer spending down for the month of January that just came out.

[oyarde]

What I find curious is everyone is talking about the market in relation to the tariff announcement, and completely ignoring the report that showed consumer spending down for the month of January that just came out.

Commerce Dept said it was up .2 percent . I really do not know what expectations are but probably anything above zero is OK with most since Christmas spending in Nov & Dec only made increases of .8 and .4 ?

[oyarde]

There was 2 1/2 percent growth last quarter last yr . May not get there first quarter this yr . Same stagnated growth that has been since the crash . Income up a percent with tax cuts. March spending numbers just got important . I would not expect Feb to impress .

[devil21]

Any excuse to explain away why imported goods will go way up in price as the petrodollar winds down. All Trump's handiwork, of course. It's times like these, rare in history, when it becomes obvious that "opposing" country's political leaders actually work together, a la UN/G20/etc. China will no doubt "respond" to this affront. Never mind that it's China that will eventually benefit the most from the petrodollar standard ending.

[TheTexan]

announced a 25 percent tariff on steel and a 10 percent tariff on aluminum.

Is this tariff high enough to bring these jobs back to America?

Maybe a higher tariff would be better, 80%?

[TheTexan]

the report that showed consumer spending down for the month of January that just came out.

Fake news.. Consumer spending is great, everyone says so

[heavenlyboy34]

What I find curious is everyone is talking about the market in relation to the tariff announcement, and completely ignoring the report that showed consumer spending down for the month of January that just came out.

Spending on what? Durable goods? Food? I don't have the numbers in front of me. :/ The way ya weight these figures makes a difference. Pretty interesting, eh?

[Zippyjuan]

Details not released yet like if it will cover all steel/ aluminum imports or just certain countries- more info expected. Canada provides the US with 20% of our steel while China (the supposed target of "unfair trade" by Trump) only provides us with two percent. Canada, Europe, China, and Mexico threaten retaliation if they do go into effect. It will raise costs and cost jobs at industries which use steel and aluminum like manufacturing, construction, and automobiles. Helping one industry will hurt others and be a net negative on the US economy.

[Zippyjuan]

Spending on what? Durable goods? Food? I don't have the numbers in front of me. :/ The way ya weight these figures makes a difference. Pretty interesting, eh?

Drop wasn't much. It fell in January last year too but was up the rest of the year. https://www.cnbc.com/2018/03/01/us-p...-jan-2018.html

When adjusted for inflation, consumer spending fell 0.1 percent, declining for the first time since January 2017. The so-called real consumer spending rose 0.2 percent in December. The drop in real consumer spending in January suggests consumption will slow from the fourth-quarter's robust 3.8 percent annualized pace.

It was also the latest indication that economic growth moderated at the start of the year after a 2.5 percent rate of expansion in the fourth quarter. Industrial production, home sales and core capital goods orders fell in January.

[specsaregood]

Details not released yet like if it will cover all steel/ aluminum imports or just certain countries- more info expected. Canada provides the US with 20% of our steel while China (the supposed target of "unfair trade" by Trump) only provides us with two percent. Canada, Europe, China, and Mexico threaten retaliation if they do go into effect. It will raise costs and cost jobs at industries which use steel and aluminum like manufacturing, construction, and automobiles. Helping one industry will hurt others and be a net negative on the US economy.

Did Trump make an economic argument in favor of the tariffs? citation of him making that claim. when I heard him announce it, he spoke of tariffs in the interest of national security. As in, if we have no domestic ability to produce the metals, it would put us at the mercy of potential enemies.

[Zippyjuan]

Did Trump make an economic argument in favor of the tariffs? citation of him making that claim. when I heard him announce it, he spoke of tariffs in the interest of national security. As in, if we have no domestic ability to produce the metals, it would put us at the mercy of potential enemies.

One tweet on the subject from today:

[specsaregood]

One tweet on the subject:

And where does that Tweet say that tariffs will improve the overall economy? When he announced the idea of the tariffs he specifically said he was worried about completely losing those industries for national security reasons.

[acptulsa]

Did Trump make an economic argument in favor of the tariffs? citation of him making that claim. when I heard him announce it, he spoke of tariffs in the interest of national security. As in, if we have no domestic ability to produce the metals, it would put us at the mercy of potential enemies.

One tweet on the subject from today:

Or to put it another way: No.

[angelatc]

Details not released yet like if it will cover all steel/ aluminum imports or just certain countries- more info expected. Canada provides the US with 20% of our steel while China (the supposed target of "unfair trade" by Trump) only provides us with two percent. Canada, Europe, China, and Mexico threaten retaliation if they do go into effect. It will raise costs and cost jobs at industries which use steel and aluminum like manufacturing, construction, and automobiles. Helping one industry will hurt others and be a net negative on the US economy.

Why is it, in liberal-land, when unions raise costs it's a great thing, but when American materials raise costs it's horrific?

[oyarde]

Details not released yet like if it will cover all steel/ aluminum imports or just certain countries- more info expected. Canada provides the US with 20% of our steel while China (the supposed target of "unfair trade" by Trump) only provides us with two percent. Canada, Europe, China, and Mexico threaten retaliation if they do go into effect. It will raise costs and cost jobs at industries which use steel and aluminum like manufacturing, construction, and automobiles. Helping one industry will hurt others and be a net negative on the US economy.

I would not use any chinese metals . None . Lowest quality available and unsafe .

[oyarde]

Is this tariff high enough to bring these jobs back to America?

Maybe a higher tariff would be better, 80%?

I have been doing my part . Make sure you get out there and buy something .

[TheTexan]

Why stop at aluminum & steel?

We should be putting tariffs on all manufacturing! Cars, computers, those toys they put in happy meals, etc

[oyarde]

Why stop at aluminum & steel?

We should be putting tariffs on all manufacturing! Cars, computers, those toys they put in happy meals, etc

Happy Meal toys absolutely .

[TheTexan]

I have been doing my part . Make sure you get out there and buy something .

Bought myself one of those coolers with built-in speakers in it, made in America

Been saving up for 3-4 months for it, finally got it

[CaptUSA]

My guess is that he’ll reverse on this before it happens. Might be a good time to get some Boeing or Caterpillar stock on the cheap.

[oyarde]

Bought myself one of those coolers with built-in speakers in it, made in America

Been saving up for 3-4 months for it, finally got it

Hope it has wheels . Mine does . Makes it easier for the Mrs to pull .

[Brian4Liberty]

It's a complex issue.

For Alan Greenspan and the Federal Reserve, a US tariff might expose their pyramid scheme, or make it crumble entirely. A tariff must be fought to the death (of the people calling for a tariff). This will be the establishment position.

For a pure free-trade advocate, you don't want any tariffs at all. Most will oppose it on principle, because it is a tariff that is theoretically under their control. The hope is that other trading partners will drop their tariffs and other hinderances to free trade in return.

But what to do when the trading partners do not reciprocate? This is the issue of "fair trade".

Here is one analogy for fair trade. Imagine the following impossible scenario:

- You and the Federal government are equals.
- The Federal government imposes a tax upon you.
- You don't believe in taxes, so you don't impose any taxes on the Federal government.
- Any time you want, you could impose an equivalent reciprocal tax on the Federal government. Do you ever do it?