SINGAPORE (Reuters) – U.S. President Donald Trump said on Sunday he will introduce new 25% tariffs on all steel and aluminum imports into the U.S., 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 U.S. 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 U.S. given its dependence on imported steel and aluminum from Canada and Mexico which are major suppliers of these metals to the U.S.
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 U.S. GDP. The inflationary effect on the U.S. 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 U.S. after the 2018 tariffs. Instead, the impact will be more pronounced on countries like Canada, Mexico, the EU, Japan, South Korea, Taiwan, and Brazil.
