We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
President Trump announced a tariff of 25% on imported steel to the U.S. yesterday, surprising not only market indexes but his own White House advisors. His intentions were very clear: “We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!” the President tweeted.
But economists and traders took the news quite differently, sending the Dow plummeting 500 points on the news. Trump’s announcement, which also included a 10% tariff on aluminum imports, sent question marks ricocheting around not only the steel industry but geopolitical certainties in the Western hemisphere — most importantly, NAFTA.
The North American Free Trade Agreement would be immediately affected by these tariffs, as Canada is the biggest steel and aluminum importer to the U.S. in the world (16% steel, 43% aluminum). Currently, our closest ally and trading partner hopes to work out certain exemptions — or at least reassurances — regarding these purported tariffs, that they won’t be held to such an extreme new standard. This is especially considering there’s no secret who Trump’s target of these tariffs really is: China.
Since the early days of his presidential campaign, Trump has said he’d get tough with China, who he claims has taken advantage of trade with the U.S. over decades of non-action from previous administrations. So these tariffs are clearly a way Trump sees to help neutralize Chinese interest on steel imports. Besides this, obviously import tariffs would help domestic steel makes, like Nucor (NUE - Free Report) and U.S. Steel (X - Free Report) greatly.
However, though the steel industry in this country hires roughly 140K workers, that’s a drop in the bucket compared to the 6.5 million workforce engaged in steel usage. Chief among these is the automobile industry, which relies greatly on steel and aluminum products. Higher prices for these materials would lead to higher prices for cars and trucks, and this sort of chain reaction through the economy is precisely why the market is having a problem digesting this news.
Currently, the Dow is down another 200 points in today’s pre-market, the Nasdaq is 80 points off its Thursday close and the S&P 500 down 20 points. It’s unlikely this issue will enjoy a swift correction in normal trading hours, so as long as this remains the main pressure on stocks today, we expect to close in the red again to end the week.
Q4 Earnings Sweep-Up
Quickly, both J.C. Penney and Foot Locker (FL - Free Report) are also trading down ahead of today’s opening bell. Though both companies beat bottom-line estimates, they missed on revenue projections and disappointed on comps and guidance.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Trump's New Tariffs In Focus
President Trump announced a tariff of 25% on imported steel to the U.S. yesterday, surprising not only market indexes but his own White House advisors. His intentions were very clear: “We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!” the President tweeted.
But economists and traders took the news quite differently, sending the Dow plummeting 500 points on the news. Trump’s announcement, which also included a 10% tariff on aluminum imports, sent question marks ricocheting around not only the steel industry but geopolitical certainties in the Western hemisphere — most importantly, NAFTA.
The North American Free Trade Agreement would be immediately affected by these tariffs, as Canada is the biggest steel and aluminum importer to the U.S. in the world (16% steel, 43% aluminum). Currently, our closest ally and trading partner hopes to work out certain exemptions — or at least reassurances — regarding these purported tariffs, that they won’t be held to such an extreme new standard. This is especially considering there’s no secret who Trump’s target of these tariffs really is: China.
Since the early days of his presidential campaign, Trump has said he’d get tough with China, who he claims has taken advantage of trade with the U.S. over decades of non-action from previous administrations. So these tariffs are clearly a way Trump sees to help neutralize Chinese interest on steel imports. Besides this, obviously import tariffs would help domestic steel makes, like Nucor (NUE - Free Report) and U.S. Steel (X - Free Report) greatly.
However, though the steel industry in this country hires roughly 140K workers, that’s a drop in the bucket compared to the 6.5 million workforce engaged in steel usage. Chief among these is the automobile industry, which relies greatly on steel and aluminum products. Higher prices for these materials would lead to higher prices for cars and trucks, and this sort of chain reaction through the economy is precisely why the market is having a problem digesting this news.
Currently, the Dow is down another 200 points in today’s pre-market, the Nasdaq is 80 points off its Thursday close and the S&P 500 down 20 points. It’s unlikely this issue will enjoy a swift correction in normal trading hours, so as long as this remains the main pressure on stocks today, we expect to close in the red again to end the week.
Q4 Earnings Sweep-Up
Quickly, both J.C. Penney and Foot Locker (FL - Free Report) are also trading down ahead of today’s opening bell. Though both companies beat bottom-line estimates, they missed on revenue projections and disappointed on comps and guidance.