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Trump takes steel rod to markets with trade war threat
LONDON, March 3, 2018 (BSS/AFP) – Donald Trump’s controversial decision to
slap tariffs on steel and aluminium imports, followed up with tweets
apparently welcoming a trade war, sent world stock markets slumping.
Equity markets, already on edge over worries about rising US interest
rates, tanked after the president imposed levies on the commodities in his
“America First” policy.
The tariffs — 25 percent on steel and 10 percent on aluminium — cover
two materials that are the lifeblood of the construction and manufacturing
sectors.
Trump followed up the tariff announcements with tweets on Friday that
boasted trade wars are easy to win and threatened to impose reciprocal taxes
on trading partners.
“Equity markets are under serious pressure after President Trump revealed
his plans to levy tariffs on imported steel and aluminium,” said market
analyst David Madden at CMC Markets UK.
“The decision is part of Trump’s ‘make America great again’ campaign, but
traders fear it could trigger a trade war.”
US markets, which nosedived on Thursday after the initial announcement,
fell at the opening bell on Friday. The Dow Jones Industrial Average was down
1.2 percent in late morning trading, after having lost 1.7 percent the day
before.
European equities fell sharply, with Frankfurt tanking 2.2 percent on
worries about the eurozone’s powerhouse German economy, with Paris falling
even more — 2.4 percent.
Slumping shares in mining companies penalised London’s FTSE 100, which
ended the day down 1.5 percent.
– Germany hardest hit? –
“While Donald Trump considers himself pro-business, the imposition of
tariffs across the aluminium and steel sector has led to fears over a
collapse in global trade,” added IG analyst Joshua Mahony.
“The threat of a trade war was always likely to hit the export-driven
German economy hardest.”
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Aluminium and steel firms, as well as companies that use the products —
such as electronics and auto makers — all took a major hit.
Shares in the world’s top steelmaker ArcelorMittal slumped nearly four
percent in Amsterdam. Shares in its German peer ThyssenKrupp fell by more
than four percent in Frankfurt, where it topped the losers board.
Shares in German automakers Volkswagen and Daimler shed more than two
percent and industrials giant Siemens lost more than three percent.
In London, there were heavy declines of more than three percent for miners
Anglo American, Glencore and Rio Tinto.
– Kuroda weighs –
Asian equities also dived, with Tokyo tumbling 2.5 percent after Bank of
Japan boss Haruhiko Kuroda indicated the central bank could start looking to
wind in crisis-era stimulus as early as next year.
“I think the selloff was a number of things — not just trade — but
including Kuroda’s comments on timelines for exit of stimulus,” said William
Hamlyn, investment analyst at Manulife Asset Management.
“Markets are trying to decide whether this (Trump’s tariffs move) is just
specific to steel or whether it’s the first step in a broader anti-trade
agenda,” he added.
Trump’s moves were met with anger from key allies including the EU and
Canada, and were even opposed by figures inside the White House.
China has previously warned it would be forced to act should Trump push
through such measures.
The tycoon had campaigned on a protectionist platform, saying the US was
being taken advantage of by other countries, and promised to throw up
barriers to protect jobs at home.
Markets have also been slammed this week after new Federal Reserve boss
Jerome Powell fanned expectations of sharper-than-expected US interest rate
increases, while investors remain anxious over Sunday’s looming election in
Italy.
However, Powell struck a softer tone on Thursday, stressing that future
rate hikes would be gradual and allow the world’s biggest economy to expand.
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