Trump's protectionist-tariff announcements send markets into a sea of RED
|Markets have turned risk off as we enter early Asia and head towards a close on Wall Street on the back of concerns over higher inflation and Trump's protectionist policies that could be detrimental to corporations and consumers.
In recent trade, Trump told steel and aluminium executives who were meeting at the White House today with executives from the industry, including U.S. Steel Corp. X, +5.49% , Nucor Corp. NUE, +2.75% and Century Aluminum Co. CENX, +6.48% that tariffs would be put on imports “for a long period of time.”
Tump proposed 25% for steel imports and 10% for aluminium and would sign orders as early as next week. “You’ll have protection for a long time,” Trump said to the executives.
This has come on the back of determination by the Commerce Department that imports threatened national security. However, not all Republicans are content with such a move, not least the markets either that are trying to swallow the recent inflationary pill dosed out to the markets by Powell this week in his hawkish testimony to Congress. Fellow farm-state Sen. Sasse said, “you’d expect a policy this bad from a leftist administration, not a supposedly Republican one.” Republican Sens. Ben Sasse of Nebraska and Pat Roberts of Kansas argued against Trump’s announcements, with Roberts warning of potential retaliation from trading partners and saying it’s “terribly counterproductive for the [agriculture] economy.”
The Trade Wars have begun
The announcements have raised industry heads and global officials from their chairs, sparking the makings of an outright trade war with the likes of EU's Juncker who ‘strongly regrets’ us restriction on steel, aluminium affecting EU and the Canadian Trade Minister who says that any US aluminium, steel tariff on Canada is ‘unacceptable’.
- EU: to ‘firmly react’ to Trump tariffs bring forward countermeasures.
- EU's Juncker: ‘strongly regrets’ us restriction on steel, aluminium affecting EU.
- EU's Juncker: US steel, aluminium restrictions are ‘blatant intervention to protect US domestic industry’ with no national security justification.
- Canadian Trade Minister: any US aluminium, steel tariff on Canada is ‘unacceptable’.
- German steel association: EU must now ‘resolutely proceed’ vs us import tariffs by using WTO instruments - RTRS.
- German steel association: US plan to impose tariffs on steel imports violates WTO rules - RTRS.
A sea of red on the tickers
In terms of the market impact so far, its a sea of red out there with USD/JPY to the lowest levels since 18th Feb testing the bull's commitments at the 106.20 support level, EUR/JPY headed for a test of the 200-W SMA, 2658.03 has been the low in the S&P so far, pressured further below its 21-D SMA and falling away now from the hourly smas. The Dow was falling 600 points and has broken trend line support and Feb 21st previous low.
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