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Markets react to Trump’s tariffs on imports of steel and aluminum

Markets react to Trump’s tariffs on imports of steel and aluminum

Donald Trump, the president of the United States, announced on Sunday that he would impose new tariffs of 25% on all imports of steel and aluminum into the U.S. on top existing metals duties. He said that he would announce reciprocal tariffs either on Tuesday or Wednesday.

On Monday, shares of steelmakers in Asia fell mainly except for those that have operations in the United States. The dollar grew and U.S. Treasury rates ticked up.

What market participants say:

DAMIAN ROONEY, INSTITUTIONAL SALE DIRECTOR, ARCONAUT, PERTH

"Trump's tariffs are causing an enormous amount of uncertainty and that is something no one wants!

The market is trying to digest Trump's economy and his policies.

CHARU CHANANA IS THE CHIEF INVESTMENT STRATEGIST AT SAXO IN SINGAPORE

These threats seem legitimate, and Trump has the power to implement them on national security grounds. After the 2018 tariffs, China is not a major steel supplier to the U.S. and therefore the old playbook cannot be used. The impact on countries such as Canada, Mexico and the EU will be greater than that of other countries.

The immediate concern may not be inflation as there could also be other effects, such as a slowdown in demand. The greater concern is uncertainty and a shift to a more protective world.

TONY SYCAMORE MARKET ANALYST IG SYDNEY

"It was a different reaction. The week began much like the last - headlines about tariffs were made, but the response was different. U.S. stock futures were trading higher and even the ASX 200 had a slight bounce off its lows. The Aussie dollar continues to struggle, but I feel that after last week's whipsaw ride, it will be harder to just shoot and then ask questions.

DANIEL HYNES SENIOR COMMODITY STRATEGIST ANZ SYDNEY

"I think U.S. producers will be forced to pay higher prices due to these 25% tariffs." The country is heavily reliant on imports, relying on aluminium at 40-45% and steel at 12-15%.

I suspect that regional pricing will be the first to react. U.S. Prices are likely to be much higher as traders are anxious to secure metals before tariffs are implemented. Reporting by Asia Markets Team; Editing done by Lincoln Feast.

(source: Reuters)