Markets react to Trump's tariffs on steel and aluminium imports
Business
Shares of steelmakers in Asia mostly fell on Monday, save for those with operations in the US
SINGAPORE (Reuters) – US President Donald Trump said on Sunday he will introduce new 25% tariffs on all steel and aluminum imports into the US, on top of existing metals duties. He also said he will announce reciprocal tariffs on Tuesday or Wednesday.
Shares of steelmakers in Asia mostly fell on Monday, save for those with operations in the United States. The dollar rose and US Treasury yields ticked higher.
Here is what market participants are saying:
VASU MENON, MANAGING DIRECTOR, INVESTMENT STRATEGY, OCBC, SINGAPORE
"It is unclear if Trump's latest steel and aluminium tariffs is a negotiation strategy which he may dial down on later. After all if implemented it will also hurt the US given its dependence on imported steel and aluminum from Canada and Mexico which are major suppliers of these metals to the US
Markets will be on edge and volatile with the escalating trade war and investors need to tread with caution for now and brace for possibly more market turbulence."
KYLE RODDA, SENIOR MARKETS ANALYST, CAPITAL.COM, MELBOURNE
"It adds to the potential looming price shock from Trump's trade policy. In the short term that's inflationary. In the longer-run and in the aggregate, it's going to be a drag on growth. There's now also the issue of a tit-for-tat dynamic emerging in the global economy as competitors like China respond with counter measures. Currently, markets are mostly responding to the uncertainty. But as the odds of an all out trade war increases, they will have to increasingly discount marginally weaker economic activity."
TOMO KINOSHITA, GLOBAL MARKET STRATEGIST, INVESCO ASSET MANAGEMENT JAPAN, TOKYO
"Although the details (of 25% tariff on steel and aluminum) have not been released, considering that the United States imports over $100 billion annually for steel and aluminum combined, the annual additional tariff resulting from this new tariff is likely to be around $25 billion. That would be less than 0.1% of US GDP. The inflationary effect on the US economy ... is expected to emerge slowly, but I think it would be at most around 0.1%, so the impact would be pretty limited."
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
"These threats appear legitimate and within Trump's power to implement on the basis of national security. The old playbook can't be used because China is no longer a significant supplier of steel to the US after the 2018 tariffs. Instead, the impact will be more pronounced on countries like Canada, Mexico, the EU, Japan, South Korea, Taiwan, and Brazil.
"The immediate concern, however, might not be inflation, as there could be counter effects such as demand slowdown. The bigger concern is the uncertainty and the shift towards a more protectionist world."
TONY SYCAMORE, MARKET ANALYST, IG, SYDNEY
"It's been a very different reaction. This week started like last week did - we've seen tariff headlines, but the reaction has been somewhat different across asset classes ... US equity futures are trading higher, and in fact, even the ASX 200 has bounced somewhat off its early lows. The Aussie dollar is still struggling a little bit, but my feel is that ... after the whipsaw ride we saw last week, there's going to be less of a temptation now to shoot first and ask questions later."
DANIEL HYNES, SENIOR COMMODITY STRATEGIST, ANZ, SYDNEY
"I suspect US manufacturers will have to wear higher prices as a result of these 25% tariffs. Its import reliance is high, around 40%-45% for aluminium and 12%-15% for steel.
"I suspect we see regional pricing react first. US prices are likely to be big higher, with traders anxious to secure metal before the tariffs are applied. "
