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Dow sheds 420 points due to tariff concerns

March 02, 2018 20:30·
Stocks Sink as Market Throws a Tariff Tantrum The Associated Press by John Carney1 Mar 20180 1 Mar 2018 1 Mar 2018

Stocks Sink as Market Throws a Tariff Tantrum The Associated Press by John Carney1 Mar 20180 1 Mar 2018 1 Mar 2018

Critics of the tariffs fear they will start a trade war between the United States and countries like China.

Though steelmaker stocks rose sharply after President Donald Trump announced steep tariffs on aluminum and steel from overseas, energy companies and pipeline makers will likely take a hit.

Mr Trump tweeted that the United States had been "decimated by unfair trade and bad policy".

Others warned that tariffs would drive up the cost of products that rely on inputs of steel and aluminum, including infrastructure sectors like transportation, manufacturing, agriculture and energy. "But I don't blame the other countries", Trump said.

Trump will reportedly sign the new trade measure next week, which will put a 25 percent tariff on steel and a 10 percent tariff on aluminum.

The Dow Jones industrial average fell 420.22 points, or 1.68 percent, to 24,608.98, the S&P 500 lost 36.16 points, or 1.33 percent, to 2,677.67 and the Nasdaq Composite dropped 92.45 points, or 1.27 percent, to 7,180.56.

China is believed to be Trump's top target. He said steel imports would face a 25 percent tariff and aluminium 10 percent. Trump said the import tariff hike would create jobs in the U.S. and benefit its industries.

Trade restrictions, by their nature, result in price increases for the goods in question. By statute, the president must make a decision in the steel investigation by April 11, 2018, and in the aluminum investigation by April 19, 2018. "The countries we deal with are not going to sit there and take this", said Phil Levy, senior fellow at the Chicago Council on Global Affairs, and a former White House economist under former President George W. Bush.

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"The foundations of our trade policy system are under threat", said Mark Rutte, prime minister of The Netherlands. "And we've tried it a bunch of times over the last two centuries", Sasse said. "A possible short-term gain for a few means a long-term loss for the many". Imported aluminum is even more pervasive: More than 90 percent of the 5.5 million tons of aluminum used in the United States is imported. "The biggest wildcard would be a trade war and nobody should be excited for that". Ben Sasse, Nebraska Republican.

Sasse continues: "Kooky 18th century protectionism will jack up prices on American families - and will prompt retaliation from other countries".

"The steel sector is one of Canada's key economic drivers and employers, directly and indirectly supporting good jobs in almost every region in Canada", said CLC president Hassan Yussuff.

"While I am sympathetic to the issues facing domestic steel manufacturers, there must be a better way to address the steel industries concerns, and I hope Congress and the executive branch can identify an alternative solution before these tariffs are finalized next week", he said.

The move, which will hit countries such as Canada, Russia and China, is created to prevent "unfair trade" according to Trump. That argument won support in industrial areas of Pennsylvania and MI, two states that helped Trump win the election over Democrat Hillary Clinton.

It's not yet clear whether some key USA trading partners will be exempt - which means even the European Union and Canada, the largest supplier of steel to the US, could get hit with the new duties.

"This is something the president has wanted to do for quite some time", Sanders said.

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