Wall Street Falls 1 % on Trump Tariff Comments
Wall Street continues to fall by close to 2%, under pressure from Trump's announcement of tariffs on steel and aluminum imports and worries about the pace of rising policy rates.
One of the contributing factors to this red tide on Wall Street is the announcement by US President Donald Trump about the imposition of tariffs on the import of steel and aluminum.
Trump said he will formally sign these measures next week, promising they will stay in force "over a long period of time." These trade measures aim, in particular, to impose tariffs of 25% on steel imports and 10% on aluminum entering the country.
On the other hand, fears remain about the pace of rising interest rates in the US.
Jerome Powell, the new President of the Federal Reserve, told the US Congress on Tuesday that the best way to respond to the current situation is to continue the policy of gradual increase of US interest rates. Even if the context is one of strong economic growth and rising consumer prices.
However, Powell left in the air the possibility of even reinforcing the normalization of monetary policy.
These comments have heightened bets that the US central bank may raise interest rates four times this year - not three, as it anticipated last December. And that should continue to exert some pressure on the exchanges as investors prefer the bond market to the detriment of the shareholder at a time when US debt rates are on the rise.
In fact, it is expected that an increase in the federal funds rate will be decided at the March meeting.
The fact that Powell spoke of "more gradual increases" was in line with what had already been released last week when the minutes of the Fed's Jan. 30 and 31 meeting were released.
Now, this Thursday, New York Fed Chairman William Dudley has said he is confident that interest rises will continue to be necessary because of the spike in US tax cuts and rising federal spending.
Let me know your thoughts on this subject.
Cheers
It looks to me that trump aims to bring back the Aluminum and steel industry, in order to compensate for the tax cuts. That’s a risky gamble to take, bearing in mind that if that doesn’t work he’ll have to look at an alternative.
Given the short amount of time, with inflation rising and also federal spending, it’s only a matter of time before the public take notice of this and unrest starts to rise, or I could be overthinking this.
You're probably right.. I think he is trying to facilitate their own steel and aluminum production instead of importing from other countries.. the problem is that he's doing it all wrong.. and now the markets are coming down..
Well he’s a businessman that has several businesses and many of them have gone bankrupt, so it’s understandable how he isn’t able to manage the economy, despite economy and company being two different things.
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