• 1 hour Gold Is Beating Buffett’s Berkshire Hathaway
  • 4 hours What’s Behind The Silver Sell-Off?
  • 7 hours The Retail Apocalypse Is Accelerating
  • 10 hours The Top Tech Stocks Of The Year
  • 1 day America’s Workforce Elderly Workforce To Double By 2028
  • 1 day Toyota Tests Solar-Powered Prius
  • 2 days Why The Gold Rally Flatlined
  • 2 days The Uranium Sector Can’t Catch A Break
  • 3 days Upcoming Fed Meeting Has Investors On Edge
  • 3 days Global Gold Sector Outlines Responsible Mining Principles
  • 4 days China’s Giant Vampire Fund Loses $120B
  • 4 days McDonalds To Roll Out Robot Drive-Thru Clerks
  • 4 days Savvy Investors Are Betting Big On This Little Data Company
  • 5 days How The Government Is Wasting Tax Money This Year
  • 5 days Supply Concerns Halt Expansion On Tianqi Lithium Plant
  • 5 days The World’s Biggest IPO Is Almost Here
  • 6 days The Relatively Of Money And Happiness
  • 6 days Wall Street Unfazed By Recession Fears
  • 6 days SoftBank Urges WeWork To Pause IPO Plans
  • 7 days Anti-Aging Market To Hit $55 Billion
Charles Benavidez

Charles Benavidez

Staff Writer, Safehaven.com

Charles Benavidez is a writer and editor for Safehaven.com. Charles is located in New York City and has over 5 years of experiencing covering financial…

Contact Author

  1. Home
  2. News
  3. Breaking News

Trump’s Tariffs: “Trade Wars Are Good”

Trump

Steel stocks may be riding high, but the trade-off for Trump’s huge tariffs on imports so far is a major market sell-off and vows of retaliation from Canada to China and Europe to Mexico that could have much wider economic implications.

Trump’s Thursday announcement that the U.S. will impose a 25-percent tariff on steel imports and a 10-percent tariff on aluminum imports promise no less than a global trade war, which Trump seems to welcome.

“Trade wars are good, and easy to win,” President Trump tweeted this morning.

The Dow closed down 420 points Thursday, with investors fearing that new life has just been breathed into the bogeyman of inflation thanks to widespread vows of retaliation across the world.

What’s good for steel isn’t necessarily good for the U.S. economy as a whole, and the new tariffs threaten to hit at profits for a wide range of U.S. exporters.

The Wall Street sell-off clearly indicates that the market thinks ‘smart’ tariffs are anything but, and the Dow might reel back even further when the tariffs are officially unveiled, as Trump has promised, next week.

The intention is clear: Last month, the U.S. Department of Commerce concluded an investigation showing that imported metal threatened national security by chipping away at the American industrial base. Steel jobs have also been a problem. The Bureau of Labor and Statistics shows that the industry employs only 140,000 workers, down from 650,000 half a century ago. Related: The Federal Reserve's Perfect Unwind

In the meantime, steel stocks may have had a bump this week, but the wider market sell-off makes it a pyrrhic victory at best, especially for major steel users like Boeing and Ford. They were already taking a hit on domestic U.S. steel prices that have gone up 20 percent since the beginning of the year.

(Click to enlarge)

(Click to enlarge)

Trump’s steel tariffs will “adversely impact automakers, the automotive supplier community and consumers,” Japan’s Toyota said Friday morning, as its shares sunk over 2 percent.

While all the focus has been on China lately, the hardest hit by U.S. steel tariffs will be the top suppliers as of last year: Canada, Brazil, South Korea, Mexico and Russia. Additionally, Turkey, Japan, Taiwan and Germany will also reel from the tariffs. 

(Click to enlarge)

They’re all lining up with reciprocal threats that could lead to a major global trade war.

Canada and the European Union have promised their own tariffs in response, and Mexico, China and Brazil are working on retaliation.

Europe, which says the tariffs will risk thousands of European jobs, has vowed to take the fight to the World Trade Organization. Germany’s steel industry will be hardest hit on the continent.

"The EU has been a close security ally of the U.S. for decades. We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk," European Commission President Jean-Claude Juncker said in a statement.

Threats have yet to take specific shape, though, as the world waits to see if Trump will actually carry through with the tariffs amid strong opposition—even from his allies in Washington.

By Charles Benavidez for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment