- Stocks sold off sharply and investors moved into the safety of bonds, after President Donald Trump said he would put tariffs on imports of steel and aluminum.
- Analysts said the tariffs were not in themselves signs of a ‘trade war’ but could be a catalyst to spur one if other countries around the world retaliated.
- The tariffs could create inflation as industries pay more for products made with steel or aluminum and pass the costs to consumers.
President Donald Trump’s plan to slap tariffs on foreign aluminum and steel could help U.S. producers, but it could also fuel inflation, slow the economy and trigger other retaliatory actions against U.S. industries, analysts said.
These fears weighed on stocks, and the market sold off sharply after initially flip-flopping amid confusion over whether there would be an announcement or not. But stocks sold off sharply when Trump surprised the markets and announced a 25 percent tariff on steel and a 10 percent tariff on aluminum.
“One of the largest fears we have is we’ve got tariffs. We could have trade wars, and it could blow up NAFTA negotiations, and nobody wins a trade war,” said Art Hogan, chief market strategist at B. Riley FBR.
Dow closes more than 400 points lower after Trump says steel and aluminum tariffs coming
The Dow Jones industrial average closed more than 400 points lower after rising more than 150 points earlier in the day.
The U.S. will set tariffs of 25 percent for steel and 10 percent for aluminum, the president said.
Wall Street also digested fresh testimony from Federal Reserve Chair Jerome Powell.
Dow ends 420 points lower as Trump calls for U.S. import tariffs on steel, aluminum