London
CNN
—
Global stocks mostly dipped on Monday as investors digested President Donald Trump’s doubling of tariffs on American’s steel imports and as trade tensions with China flare up once again.
In Asia, Hong Kong’s Hang Seng index closed down 0.6%, while Australia’s S&P/ASX 200 and Japan’s Nikkei 225 finished the day 0.2% and 1.3% lower, respectively. South Korea’s KOSPI closed up 0.1%, however.
Stocks opened lower in Europe. The region’s benchmark Stoxx Europe 600 index had ticked down 0.4% by 6.12 am ET, while Germany’s DAX and France’s CAC had fallen 0.5% and 0.6% lower, respectively. London’s FTSE 100 was trading flat by the same time.
US futures were also in the red. Futures in the S&P 500 were down 0.5% and the Dow 0.4%. The tech-heavy Nasdaq index was down 0.7% before the opening bell.
Despite Trump’s tariff plan hitting a legal stumbling block last week, Trump upped the ante in his trade war again on Friday.
The president claimed that China had violated a trade truce agreed with the US last month that saw both sides drastically roll back tariffs on each other’s goods. In response, Beijing accused the US on Monday of “provoking new economic and trade frictions.”
Trump also announced Friday that he plans to set tariffs on US steel imports at 50% —doubling their current rate — in a bid to protect America’s steelworkers. The higher levy is due to come into force on Wednesday.
“At 25% (the US’ trading partners) can sorta get over that fence,” Trump said at a US Steel facility in West Mifflin, Pennsylvania. “At 50% nobody’s getting over that fence.”
The European Union vowed Saturday to retaliate unless a “mutually acceptable solution” is reached with Washington. Without an accord, “both existing and additional EU (counter) measures will automatically take effect on 14 July — or earlier, if circumstances require,” Olof Gill, the European Commission spokesperson for trade, told CNN.
Paul Donovan, chief economist at UBS Global Wealth Management, told CNN that, while investors increasingly assume that the US will stage a “rapid retreat” from any new tariff threats, “there seems to be less confidence in that being the case this time” over steel.
He explained that steel tariffs are not at risk from the last week’s US court ruling that temporarily blocked the bulk of Trump’s global tariffs (that ruling was later paused by an appeals court and the levies were restored the next day).
Trump stridently rebuffed the idea last week that he “chickens out” of imposing tariffs. A Financial Times columnist coined the acronym “TACO” in May — “Trump Always Chickens Out” — to describe the president’s repeated reversals and climb downs from his tariff agenda.
“The president’s reaction to questions last Wednesday about investors’ expectations of repeated retreats from tariff positions suggests that Trump does not want the reputation of always climbing down on tariff announcements,” Donovan added. “This is the first tariff announcement since that incident.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said markets were falling Monday as “new fractures in the global trade war open up,” citing Trump’s threatened steel and aluminum tariffs and the flare up in US-China tensions.
“It’s a big setback for steel manufacturers around the world, with orders set to be disrupted yet again,” she wrote in a note Monday.
“Wall Street is set to start the week on a downbeat note,” she added, noting that — as a major importer of steel and aluminum — Trump’s new tariff pledge raises “inflationary concerns in the US… (threatening to) push up costs for manufacturers and the construction industry.”
The US is the world’s largest single-country importer of steel, according to the US International Trade Administration. Last year, Washington imported 26.2 million metric tons of the metal from across 79 countries and territories.
But Chris Beauchamp, chief market analyst at trading platform IG, told CNN that Monday’s market falls have been “relatively restrained” because investors expect Trump to back away from his new steel tariff threat.
“Despite talking a very tough game, the administration seems to have no appetite for the kind of market volatility that would come with a full-blown trade war,” he said.
