Stocks Plunge: Wall Street Fears Trade War, Inflation
Trade disruption. Trump said Thursday that he would impose stiff tariffs on imports of steel and aluminum, making good on a key campaign promise and rattling stock markets as the prospect of a global trade fight appeared imminent.
In a hastily arranged meeting with industry executives that stunned many inside the West Wing, Trump said he would formally sign the trade measures next week and promised they would be in effect “for a long period of time.” The action, which came against the wishes of Trump’s pro-trade advisers, would impose tariffs of 25% on steel and 10% on aluminum, effectively placing a tax on every foreign shipment of those metals into the United States.
Trump’s authority to impose such sweeping tariffs stems from a Commerce Department investigation that concluded last month that imported metal threatened national security by degrading the American industrial base. The administration has said it wants to combat cheap metals flooding into the United States, particularly from China, but a broad set of tariffs would fall most heavily on allies, especially Canada, which supplies steel and aluminum to American companies as well as the military.
“People have no idea how badly our country has been treated by other countries,” Trump said. “They’ve destroyed the steel industry, they’ve destroyed the aluminum industry, and other industries, frankly.”
Market rout. Shares of large U.S. companies were hit hard Thursday after Trump announced the tariffs. The Dow Jones Industrial Average tumbled 420 points, or 1.7%, although it was down as much as 2.3% during the trading session. The S&P 500 Index fell 36 points, or 1.3%.
The session’s rout for stocks followed an ugly month for all three benchmarks in February. The Dow gave up 4.3% in February, notching its biggest monthly drop in more than two years and paring its advance over the past 12 months to 20%.
Import tariffs can push the price of goods and services up, and could spark retaliation from other countries, exacerbating concerns for markets about inflation pressures running high, market participants said.
Ivanka investigated. U.S. counterintelligence officials are scrutinizing one of Ivanka Trump’s international business deals, according to two sources familiar with the matter, CNN reported. The FBI has been looking into the negotiations and financing surrounding Trump International Hotel and Tower in Vancouver, according to a U.S. official and a former U.S. official. The scrutiny could be a hurdle for the First Daughter as she tries to obtain a full security clearance in her role as adviser to her father.
The FBI has been looking closely at the international business entanglements of both Ivanka Trump and her husband, Jared Kushner, to determine whether any of those deals could leave them vulnerable to pressure from foreign agents, including China. The development—a 616-foot beacon dotting the Vancouver skyline and featuring a trademarked Ivanka Trump spa—opened in February 2017, just after Trump took office.
Delta denied. Georgia lawmakers approved a bill Thursday that stripped out a tax break proposal highly coveted by Atlanta-based Delta Air Lines—the most stinging punishment that America’s pro-gun forces have leveled so far on one of the many corporations recalibrating their positions on firearms after the Florida high school massacre. The $50 million sales tax exemption on jet fuel that was sought by Delta, one of Georgia’s biggest employers, had been included in a broader tax-relief bill. But this week, a number of Georgia Republicans, including Lt. Gov. Casey Cagle, sought to remove the perk as retribution for Delta’s decision to end a promotional discount for members of the National Rifle Association.
Data breach gets worse. Equifax Inc. said Thursday that it identified an additional 2.4 million U.S. consumers affected by last year’s massive data breach, bringing the total number of people whose data was compromised to more than 147 million. The company said in a statement that the newly identified victims had their names and partial driver’s license information stolen, but that the hackers had not obtained their Social Security numbers.
Featured photo: A production line at a steel mill in China. (China Daily)