Stock Markets Rise After Trump Sets Aluminum and Steel Tariffs
Wall Street ended Thursday’s trading higher after President Trump implemented import tariffs of 10% on aluminum and 25% for steel. The president, however, excluded two key US trade allies – Mexico and Canada – and said it was possible for other nations to apply for exemptions, but failed to go into details of when and how that could happen.
The Nasdaq Composite closed at 7,427.95 after gaining 0.4 percent. The S%P 500 ended yesterday’s trading at 2,738.97 after adding 0.45 percent, or 12.17 points. The Dow rose 0.38 percent, or 93.85 points to end at 24,895.21. Throughout the session, the major averages zigzagged between losses and gains.
Boeing shares climbed 0.5 percent, while Nucor and U.S Steel shares plunged 2.7% and 2.9% respectively. Century Aluminum, a big beneficiary of Trump’s tariffs, saw its shares plummet 7.5 percent. During a press conference last week, the President said he wanted to impose the tariffs with “no exemptions”.
The announcement ignited fears that a global trade war was in the offing. The departure of Gary Cohn as White House chief economic advisor made the possibility of the war even more likely. Cohn was not in favor of the tariffs and his exit left Wall Street worried.
But in his speech during the signing tariffs order, Trump seemed to backtrack from his earlier point of view, by excluding Mexico and Canada and offered the likelihood of exempting other allies. Implementation of the duties has angered opposition from some members of the President’s own Republican Party and business leaders, who worry that the U.S economy will be hurt if other countries decide to retaliate.
Trump’s tariffs are seemingly aimed at China; however, the country supplies less than 1 percent of America’s aluminum and steel imports. Had Canada not been excluded from them, it would have been one of the hardest hit countries, as it accounts supplies about 2.5 million tonnes of aluminum to the United States each year.
Asian car manufacturers will feel the brunt of the new tariffs. Last week, Toyota criticized them, pointing out that its plant’s in America source aluminum and steel from within China. The company said the tariffs would bring about increased costs for consumers and unfavorably affect car makers.
Some key trading partners of the US have suggested that they may counter the tariffs through direct action. Retaliation measures could include EU tariffs on American bourbon, oranges, and tobacco. Motorcycle maker Harley-Davidson has also suggested that it would poke into Paul Ryan’s – Republican US House of Representatives Speaker – Wisconsin state.
The President on Thursday said a strong aluminum and steel industry are critical to the American national security, adding that “if you don’t have steel, you don’t have a country.”
It now remains to be seen whether other countries will retaliate and instigate a global war trade. China, South Korea, and Germany have already urged the US to make positive contributions to the economic and trade world order by respecting multilateral rules.