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Instant View-Hefty Trump Tariffs Surprise Markets, Stocks Slide
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose tariffs in return for duties imposed by other countries on U.S. products. Trump told an audience in the White House Rose Garden that "it's our declaration" of independence. "We will set a minimum base tariff of 10%." China's rate would be 34% while Japan and the European Union would pay 20% and 24% respectively. S&P futures fell 3%, indicating that investors are expecting a big loss when Wall Street opens Thursday. Treasury yields and other stock markets fell as well, while the Chinese yuan hit a new low. COMMENTS: NIGEL GREEN is the CEO of DEVERE GROUP in Dubai, UAE "This is what you do when you claim to be supercharging the global economic engine, but sabotage it. The global trade is experiencing a historic day. Tariffs are simply taxes and the American consumer will be hit hard. Businesses freeze plans, stop hiring and invest when they don't know how the trade will be next quarter. This ripple effect reaches consumers. The recession begins with this chilling effect. "The dollar is no longer the dominant currency. The credibility of the United States is at stake. Investors are nervous about the dollar, which is the world's reserve currency. "Trust is earned and lost easily." SCOTT WREN SENIOR GLOBAL MARKET STRATEGIST WELLS FARGGO INVESTMENT INSITUTE, ST. LOUIS MISSOURI "There aren't many surprises in this case. I'm a bit surprised that the amount is a bit less than we had anticipated. We've always wanted to invest in the U.S. compared to other countries, and that won't change. We are overweighting midcaps and we like large caps. Our outlook on this pullback is positive, but not overly so. We're trying to get some exposure here. We are not trying to conceal. We don't wish to be defensive. We want to use stock price pullbacks as an opportunity to buy stocks to play what we perceive as a better second-half." OLGA YANGOL MANAGING DIRECTOR HEAD OF EMERGING MARKETS RESEARCH & STRATEGY AMERICAS CREDIT AGRICOLE CIB - AMERICAS NEW YORK "I don't believe that the baseline tariff number should surprise the market. We must cycle through each country and their impact. It seems, on the surface at least, that Brazil has a fairly good deal. With Mexico, it's not entirely clear. What will matter most is whether or not those USMCA exemptions are actually extended. We are underweighting MXN. Our overall directional outlook on the dollar against (emerging market) is neutral or slightly defensive. OLGA BITEL - GLOBAL STRATEGIST - WILLIAM BLAIR & CO., CHICAGO "Now, the question is: Is U.S. exceptionalism about to change? If so, to where will this leadership migrate?" Many countries have the capability and will to respond. "I don’t think that we are in for a time of clarity or stability, but rather I see this opening salvo, and I expect a lot of back-and-forth." The question is whether the U.S. can implement these tariffs given the different rates for different products coming from different countries. ERIC M. CLARK CHIEF INVESTMENT OFFICER ALPHA BRANDS PORTFOLIO MANAGER SAN DIEGO CALIFORNIA These tariffs will certainly push consumers in China or other countries to buy more of their products, whether they are Chinese-made or not. It is a dangerous game, because consumers who are forced to switch products will usually get used to them and never look back. "We are pushing nationalism further in these local market. Trump has chosen to be isolationist because of the tone in which he talks about other leaders and countries, and the nationalism he will bring. The S&P 500 companies generate more than 40% their revenues outside of the U.S. This increases the risk of a recession in the United States. "I expect this chaos to be created to create panic. The uncertainty will drive yields lower at a time when demand is high for our debt, which allows us to refinance $4 trillion to 5 trillion dollars at better rates. Over the next few months, the tariff agreements start to be retracted and the stock market begins to rise. JEANETTE GERRATTY CHIEF ECONOMIST, ROBERTSON STEPHENS MENLO PARK CA. "The tariffs were so extensive and larger than expected." Earlier, people were discussing whether clarity could boost the market. Now that you've got clarity, no one is happy with what they see. "It's not speculation that this will cause the economy to slow down and prices to rise. It will actually happen." MICHAEL MULLANEY IS DIRECTOR OF GLOBAL MARKET RESEARCH AT BOSTON PARTNERS IN BOSTON We have clarity now. When you dig deeper into the numbers you will find that the clarity isn't as good as the 10% baseline might have you believe. It means that the S&P 500's earnings per share are likely to continue declining for 2025, and possibly spilling into 2026. SARAH KETTERER, CEO, CAUSEWAY CAPITAL MANAGEMENT, LOS ANGELES This is just a salvo. It's not the final list. There will be several rounds of negotiation. "Market weakness should allow you to invest in global equity markets. European spending is going to be huge and pivotal. It will also be very stimulating, especially if combined with increased bank lending. It's certainly not "Happy Days", but global equity markets, and especially European stocks that have trailed U.S. stock prices for 17 years, will be able to perform better. We believe that some of the gap will be closed." BYRON ANDERSON HEAD OF FIXED RESULTS, LAFFER-TENGLER INVESTMENTS SCOTTSDALE, ARIZONA "Reciprocal Tariffs will ultimately deflationary, as our trading partners will begin to eliminate tariffs. If we do get some moderation, the market is not in a good position. We should also see the unwinding of the flight of safety. This means that treasury rates are rising and high yield credit spreads will be easing. Expect volatility as certain countries continue to defend their status quo." JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN It makes sense to watch the market's reaction. The Japanese yen will be a safe haven, as well as repatriation into Japan and falling U.S. interest rates. Treasuries, particularly at the low end of the yield-curve, can be considered a safe haven. I believe that these two trades would be the most important. Even longer-term Treasuries may do well. "If Republicans continue to hammer on about tax reductions, I wonder whether (longer-term Treasuries are a good investment). For now, the direction seems clear. "Gold, especially short-dated U.S. Treasury bonds, is the best option for storing things. There's also a wildcard for long-term investments." JASON BRITTON, CHIEF INVESTMENT OFFICER, REFLECTION ASSET MANAGEMENT, CHARLESTON, SOUTH CAROLINA "I consider this a net positive. These tariff levels are a good starting point for future negotiations. Mexico and Canada remain exempted from any further tariffs. I believe the market will calm down and start to analyze the details, and realize that it is at best a mixed bag." "I am looking at the large technology companies who are sitting on huge piles of money. I am a buyer of weakness if they are going to be squeezed by this retreat. "It's the market that's overreacting and I'm happy to take full advantage." PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK "The tariffs seem a bit high." Even though Powell said that tariffs will only cause temporary inflation, the Federal Reserve is now faced with a difficult decision. The effects of inflation could worsen and we could head towards recession. The markets are in a condition of oversold conditions. I believe the markets will rally. (Compiled by Global Finance & Markets Breaking News; Editing by Lincoln Feast.
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Stocks fall as tariffs hurt tech stocks
Stocks plunged, bonds surged and the dollar rose on Thursday, as U.S. president Donald Trump announced an even larger-than-expected wall around the largest economy in the world, disrupting trade and supply chain. Nasdaq Futures fell 4%. Tech was on the frontline because China, which has been hit with an additional 34% tariff on top of its previous 20%, is a major manufacturing hub. Apple shares fell nearly 7% after-hours. S&P futures declined 3.3%, while Nikkei Futures fell more than 4%. Australian shares fell 2%. The U.S. Dollar was higher on a rollercoaster of currency trading, except for the safe-haven Japanese yen that surged up to 148.15 dollars per yen. Fears of an economic slowdown in the United States pushed gold to record highs. U.S. Treasury Futures also soared. Oil, which is used as a proxy to measure global growth, dropped more than 2%, leaving U.S. crude oil futures at $69.73 per barrel. Trump announced an import tariff of 10%, with much higher rates for some trading partners in Asia. In addition to China's 34% tax on imports, Japan received a 24% duty, Vietnam 46%, and South Korea, 25%. The European Union received a 20% tax. Van Eck's Vietnam ETF dropped more than 8% after-hours. Trump has also closed a loophole that was used to ship low value packages from China. This is likely to hurt China’s giant online retailers. Trading partners will likely respond with their own countermeasures that could result in dramatically higher prices. Analysts at Wedbush said that the tariffs were worse than what the Street had feared. The technology supply chains in Taiwan and China have been hit hard. Investors priced in a slower U.S. economy and an increased chance of rate reductions. Tony Sycamore, IG's market analyst, said that the tariff rates announced this morning were far above expectations. If they are not negotiated down quickly, then expectations of a U.S. recession will increase dramatically.
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Canada and Mexico are not subject to the new global rates because the fentanyl tax is still in place
Mexico and Canada were spared new tariffs Wednesday, as President Donald Trump excluded the top US trading partners from his 10% global tariff baseline. Previous duties are still in place. Tariffs will not be applied to most goods from Mexico and Canada which comply with the USMCA agreement between the three nations, except for steel and aluminium and auto exports. Trump imposed tariffs of 25% on Mexico and Canada because they did not do enough to stop migration and the trafficking of fentanyl. However, he later announced a concession for USMCA-compliant goods. The White House fact sheet stated that "for Canada and Mexico, existing fentanyl/migration orders remain in place and are not affected by this order." "In the event that the existing fentanyl/migration... orders are cancelled, USMCA-compliant goods will continue to receive preferential treatments, while non USMCA-compliant goods will be subject to an 12% reciprocal duty." Analysts said that Canada and Mexico seemed to have avoided the worst case scenario. Michael Camunez is the chief executive officer of Monarch Global Strategies. The firm advises companies doing business in Mexico. "The North American Partners were shielded from a potentially very bad day." Candace Laing is the president and CEO of Canadian Chamber of Commerce. She said: "We hope today's position of the U.S. regarding Canada will be part of real negotiations, leading ultimately to a long-term relationship." Mark Carney, Canada's prime minister, said that he would still respond to Trump's declaration with countermeasures. He said: "We will fight these tariffs by countermeasures. We will protect our workers. And we'll build the strongest G7 economy."
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QUOTES - Trade and labor associations, analyst on Trump's reciprocal duties
Donald Trump announced on Wednesday that he will impose a baseline 10% tariff on all imports into the United States, and higher duties for some of the biggest trading partners. This could lead to a trade conflict and upset the global economy. Countermeasures from trading partners could result in a dramatic increase in prices of everything, including bicycles and wine. Trump has already levied 25% on automobiles and auto parts. LIZ SHULER PRESIDENT AMERICAN FEDERATION of LABOR and CONGRESS INDUSTRIAL ORGANIZATIONS The Trump administration's attacks against the rights of union workers at home, the gutting of government agencies that work to discourage outsourcing of American jobs, and efforts to erode crucial investments in U.S. Manufacturing take us backward. RICHARD CAPETTO, SENIOR DIRECTOR, NORTH AMERICAN GOVT. AFFAIRS IPC "A strong U.S. electronic industry requires a holistic approach, one that pairs targeted incentives and investments with policies that promote mutually beneficial trade relationships. Trade is crucial to innovation, cost-competitiveness, and supply chain resilience. Tariffs could increase costs for American companies and drive production overseas. ZOLTAN VAN HEYNINGEN EXECUTIVE DIRECTOR, U.S. WOOD COALITION We welcome President Trump's measures and the focus of his administration on Canada's unfair trading practices. We are especially pleased that the President has launched the Section 232 Investigation under the Trade Expansion Act of 1964 focusing on the import of softwood lumber. MARK COMPTON EXECUTIVE DIRECTOR THE AMERICAN EXPLORATION & MINING ASSOCATION We are encouraged that the Trump administration is prioritizing the production and processing of domestic minerals so we can have the raw materials our manufacturing base, and society needs. We are looking forward to working together with the administration in order to ensure that the domestic mining industry can meet this challenge. TONY REDONDO, FOUNDER AT COSMOS CURRENCY EXCHANGE Intel is not immune to the cost increases caused by imported chips. Semiconductor giants such as Nvidia are also affected. China's retaliation against rare materials may worsen shortages. PC makers (Dell and HP) may face cost increases of 10%-25%, which could add $200-$500/unit to the unit price, pushing margins or prices down. The cost of chips and steel may cause delays for AI server companies (Nvidia and Amazon). Construction and retailers like Walmart could also be affected. "Short-term, higher costs and chaos." "Long-term, maybe more U.S. Manufacturing but labor and infrastructure are lagging." Consumers will face higher prices by 2025, unless companies absorb the costs. This is not common. BERNSTEIN ANATOMY "We are concerned that the vehicle and part tariffs will be here to stay, and they will add a significant cost burden to this sector." We see further downside risk to auto stocks if automotive tariffs do not get reversed, but are instead extended. TOM MADRECKI VICE-PRESIDENT OF SUPPLY CHAIN RESILIENCY CONSUMER BRANDS AFFILIATION The majority of consumer packaged goods are already manufactured in the United States. There are some critical inputs and ingredients that must be imported because they are scarce in the United States. Tariffs alone will not bring these ingredients back to the U.S. "Reciprocal Tariffs that don't reflect the availability of ingredients and inputs will increase costs, limit access to affordable products for consumers and unintentionally hurt iconic American manufacturers." We urge President Trump and his advisors to refine their approach to exempting key ingredients and inputs, in order to prevent inflation and protect manufacturing jobs. LENNY LARCCA, KPMG U.S. AUTOMOTIVE LEADERS "U.S. Automakers are looking for steps they can take to mitigate tariffs in the short term, such as working on items that can be shipped to the U.S. rapidly without major investment." Massive longer-term investments require more time and clarity." The current playbook of the U.S. automobile industry is insufficient, and it's a momentous time for them. Automakers have an opportunity to change the way they do business. Leverage emerging technologies like AI in all areas of their business. Explore and make alliances quicker. "Speed up the vehicle production cycle time." This watershed moment presents an opportunity for mergers and purchases. DAVID McCALL, PRESIDENT, UNION OF STEELWORKERS INTERNATIONAL We must make sure that our trade policy is aimed at cheaters and not trusted economic allies such as Canada. We should work to build relationships, not barriers, with partners who have shown their commitment to join us in tackling the global overcapacity. The administration must also take measures to prevent companies using tariffs to increase prices on consumers. NIGEL GREEN is the CEO of DEVERE GROUP, a global financial advisory firm. This is how you can sabotage world economic engines while claiming that they are supercharged. "It is a historic day for the global trade." Trump is destroying the post-war economic system that has made the U.S., and the rest of the world, more prosperous. He's doing this with reckless confidence." "Tariffs, plain and simply, are taxes. The American consumer will be the one to bear the brunt." "The truth is that these tariffs are going to push up prices on everyday items - like phones and food - at a time where inflation is already unbearably persistent." MIKE HAWES is the CEO of UK's Society of Motor Manufacturers and Traders. The tariffs cannot be absorbed, and the U.S. consumer may pay more for British products, while UK producers could have to reduce production due to a constrained market. SETH GOLDSTEIN MORNINGSTAR ANALYST FOR U.S. SETH GOLDSTEIN, MORNINGSTAR ANALYST ON U.S. "I expect lower volumes due to tariffs." Tariffs are likely to be passed on to the consumer in order to increase prices of products. "I expect that consumers will buy less goods." Due to the high fixed costs of chemical production, lower volume would have a large impact on profits. We could also see another year with declining profits if tariffs are widely implemented. Many chemical producers manufacture their products in the U.S. for domestic sales, so there is less direct impact. DAVID FRANCES, EXECUTIVE V.P. OF GOVERNMENT RELATIONS AT THE NATIONAL RENEWAL FEDERATION "More Tariffs = More Anxiety and Uncertainty for American Businesses and Consumers. Tariffs represent a tax that is paid by U.S. importers and passed on to the final consumer. No foreign country or supplier will pay tariffs. "We encourage President Trump, to hold trading partners responsible and restore fairness for American business without creating economic instability and higher prices for American family." ART WHEATON DIRECTOR, ILR SCHOOL CORNELL UNIVERSITY, LABOR STUDIES It will take years and billions to bring new manufacturing jobs online. However, expansions in existing factories can happen much faster. Companies prioritize stability. Frequent policy changes can slow down investment decisions, as businesses wait to see clearer long-term signals. MICHAEL ASHLEY SCHULMAN IS A PARTNER AT RUNNINGPOINT CAPITAL ADVISORS AND THE CIO. "Trump may be trying not only to bring manufacturing back to the U.S. but also to increase the economic instability of China by introducing 34% tariffs on Chinese goods. Tariffs of 34% on Chinese products could force Chinese manufacturers to shut down, increasing social unrest and unemployment in China. If these tariffs are imposed, they will have a significant impact on the PC, server, and semiconductor manufacturers. Investors, analysts and politicians will all be watching with bated breathe to see what happens after this 'Liberation Day volley' from the administration. The announcement today is likely to be a worst-case scenario. Hopefully, any negotiations will lead to improvements. Reporting by Juby B. in Mexico City, and Vallari S., Neil Kanatt, Shivansh T., Mrinalika R., Unnamalai L., Jaspreet S., and Dhanush B. in Bengaluru. Editing by S. Ghosh, Shounak Dasgupta, and Shounak D.
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Brazil names a senior executive from the auto industry as climate champion
Brazil announced Wednesday that Dan Ioschpe, a former executive of the auto industry who represented Brazil at the G20 Summit last year in business meetings, has been nominated as its "climate ambassador" for the United Nations climate summit 2025, also known as COP30. The country will host the summit in November. He will work for the Brazilian diplomat Andre Correa do Lago as the president of the conference to encourage and negotiate voluntary initiatives by the business community to reduce global warming. Former climate champions include environmentalists, government officials, and members of development finance. Simon Stiell is the Executive Secretary of the U.N. Framework Convention on Climate Change in a press release about the appointment. Ioschpe serves as the chairman of Iochpe-Maxion in Sao Paulo, an auto parts manufacturer, and on the boards of Brazilian companies such as Embraer, the planemaker. He was also the chair of B20, an international business forum which fosters dialogue among corporate and government leaders in the G20 group, the major global economies of which Brazil presided over last year. (Reporting and writing by Lisandra paraguassu, Editing by Brad Haynes & Stephen Coates).
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Fed's Kugler: Tariffs could cause inflation to be prolonged
Fed Governor Adriana Kulgler argued on Wednesday that rising tariffs could lead to a longer period of inflation than expected. She disputed the view that only imported goods would see an increase in price. Kugler stated that "there may be reasons" why tariffs cause a more lasting effect than merely a spike in the price for imported goods. New tariffs already implemented by President Donald Trump Target intermediate goods such as aluminum and steel. Kugler, speaking at an event held at Princeton University, said that "this will affect all sectors via supply chain networks...It might take longer to filter this through the economy." She said that the possibility of retaliation from other countries, and a possible shift in U.S. expectations of inflation, could also have an impact. As could the risk of tariffs distorting prices so much, it could shift capital to produce goods "into which we may not have a competitive advantage." Kugler stated, "That means we will be paying more for products that could have been made cheaper elsewhere." Kugler spoke at a time when Trump was introducing a new set of levies around the world. Some countries will be hit with hefty new tariffs of up to 46%, while historic allies such as the European Union are being hit with levies of 20%. Some Fed officials are concerned that Trump's actions could slow down growth in the coming months, even though prices continue to rise. This is a difficult situation for a central banks charged with maintaining prices and employment. Kugler stated that "we are already seeing upside risks in inflation...We might also see a slight slowdown down the road." Right now she said she felt higher-than-anticipated inflation was the bigger risk, particularly given that consumers seemed to be frontrunning tariffs with auto purchases, for example, that may add to growth in the near term. In remarks prepared for the occasion, she said that she supports keeping the Fed's current rate of interest steady "for so long as these inflation risks continue" given the continued economic growth and stable employment. Fed officials said that they wanted more clarity about the impact of Donald Trump's policy. Fed policymakers expect slower growth and higher inflation in 2019 than they did last year before Trump's tariffs became more clear. Howard Schneider is reporting; Paul Simao, Diane Craft and Diane Craft are editing.
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Commodities-Gold rallies and crude oil declines after Trump's tariffs
The price of crude oil fell on Wednesday and the price of gold rose after U.S. president Donald Trump announced tariffs on U.S. imported goods. This move fueled a global trade conflict and raised concerns about a possible economic slowdown. Grain futures declined ahead of Trump's announcement of tariffs. They were likely to continue their losses, as traders waited for retaliatory action from global importers who are easy targets of retaliation. Aluminum prices fell on Wednesday as investors weighed up trade action against supply concerns. Trump announced on Wednesday that all U.S. imports would be subject to a baseline 10% tariff, and he'd impose even higher duties against dozens of major trading partners including China and the European Union. Trading partners should respond to countermeasures with their own. U.S. Stock Futures fell after the announcement. Oil prices dropped to negative territory following a dollar-plus increase in the post-settlement market ahead of the announcement of tariffs on fears that a trade war could dampen demand. The oil market has reacted negatively due to fears that the U.S. Tariffs will slow economic growth in the rest of the world and other countries may retaliate with tariffs," said Andrew Lipow of Lipow Oil Associates, based in Houston. Grain futures fell on Wednesday, as traders feared that U.S. exports would suffer if Trump’s tariffs caused retaliation by major buyers such as China, the top soybean importer in the world, and Mexico, No. Mexico is the world's No. 1 corn purchaser. Mike Zuzolo is the president of Global Commodity Analytics. He said, "We are likely to see a weaker open due to a weaker Asian Market." The dollar's weakness could offer support to the market.
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INSTANT VIEW: Trump's hefty tariffs shock markets and cause S&P futures to fall
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose reciprocal duties to match duties placed on U.S. products by other countries. Trump told an audience in the White House Rose Garden that "it's our declaration" of independence. "We will set a minimum base tariff of 10%." The rates for China will be 34% while those for the European Union, Japan and Canada would be 20% and 24% respectively. S&P futures fell 3%, indicating that investors are expecting deep losses on Wall Street when it opens Thursday. S&P 500 Futures fell 3%. This suggests investors will suffer heavy losses on Wall Street when it opens Thursday. Nasdaq Futures, which reflect tech companies like Apple, Nvidia, and Microsoft, fell almost 4%. S&P 500 futures tumbled 3%, suggesting investors expect deep losses when Wall Street opens on Thursday. COMMENTS: SARAH KETTERER CEO, CAUSEWAY CAPITAL MANAGEMENT LOS ANGELES: "This is a salvo. This isn't a final list. It's only another round in what will be countless rounds of negotiation." "Market weakness should allow you to invest in global equity markets. European spending is going to be huge and pivotal. It will also be very stimulating, especially if combined with increased bank lending. It's certainly not "Happy Days", but global equity markets, and especially European stocks that have trailed U.S. stock prices for 17 years, will be able to perform better. We believe that some of the gap will be closed." BYRON ANDERSON HEAD OF FIXED RESULTS, LAFFER-TENGLER INVESTMENTS SCOTTSDALE ARIZONA "We're back at the inflection points for Treasury yields. We're basically at the average of the previous two years. The bond market initially reacted as we had expected, namely by selling off. Did we receive reciprocal tariffs? The market is also not sure. "If we can get some moderation in today's market, it will be crucial to the bond scenario. It will also help calm down the markets." "Reciprocal Tariffs will eventually be deflationary, as our trading partners will begin to eliminate tariffs." If we do get some moderation, the market is not in a good position. We should also see the unwinding of the flight of safety. This means that treasury rates are rising and high yield credit spreads will be softer. Expect volatility as certain countries continue to defend their status quo." NANCY TENGLER is CEO and CIO of LAFFER TENGLER Investments, SCOTTSDALE (ARIZONA). "The Administration prided itself in being the administration for the common man. The common man is employed by the automotive industry. If the auto tariffs are imposed, the demand for automobiles will decrease. You can stop there. As purchasing managers tried to stay ahead of tariffs, we have seen a pull-forward in economic numbers. Imports are up, which puts downward pressure on the GDP. The decline in manufacturing PMIs is most puzzling, as they printed contractionary readings last months due to the drop in new orders and employment. Carvana surged in after-hour trading on Trump tariffs. Tesla (mostly made in the U.S.A.) is also trading up. Ford and GM are both flat. Carvana will profit from the increased demand for used vehicles." ADAM HETTS GLOBAL HEAD, MULTI ASSET, JANUS HENDERSON INVESTOR, DENVER: "Eye watering tariffs, country by country, scream negotiation tactics, and will keep the markets on edge in the near future. This means that there is room to lower tariffs, even though a baseline of 10% has been set. The administration has shown a surprising tolerance for market pain. Now the question is, how much tolerance does it have for real economic pain during negotiations? The S&P 500's recovery after a positive ADP jobs report was a reminder of the broader economic focus. The ISM nonfarm payrolls and services data this week will be closely scrutinized, as any weakness will fuel recession fears." JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN : "I was shocked at how negative or heavy these tariffs are. This will lead to a lot of tit for tat negotiations. What concessions can the U.S. make to lower these tariffs, what leverage they use to convince other countries to reduce these levels, be it defense concerns in Europe or Japan. China, I suspect, sticks. The Chinese response may be interesting." The market's reaction is expected to be negative. Treasuries are a safe-haven trade, particularly at the low end of the yield spectrum. Even longer-term Treasuries may do well." "If Republicans continue to hammer on about tax reductions, I wonder whether (longer-term Treasuries are a good investment). For now, the direction seems clear. "Gold, especially short-dated U.S. Treasury bonds, is the best option for safe-keeping. You can also use it as a wildcard for long-term investments." WALTER TODD CHIEF INVESTOR, GREENWOOD CAPITAL GREENWOOD SOUTH CAROLINA WALTER: "We only have one side to the story. That's what we do. The other side is how other countries react to what we do. This is a major factor in how the market will ultimately respond to what's being said. The other part of the puzzle is how individual countries or groups of countries react to what's being said... Depending on what other countries are doing, I still feel like the market is looking to use the 5,500 level of the S&P 500 as a springboard. JASON BRITTON CHIEF INVESTMENT OFFICER REFLECTION ASSET MANAGEMENT CHARLESTON SOUTH CAROLINA 'I see this as a net positive. These tariff levels are a good starting point for future negotiations. Mexico and Canada remain exempted from any further tariffs. I believe the market will calm down, parse out the details and see that it is at best a mixed bag. "I am looking at the large technology companies who have huge piles of cash. I am a buyer of weakness if they are going to be squeezed by this retreat. "It's the market that's overreacting and I'm happy to take full advantage." JOHN LUKE TYNER, APTUS CAPITAL AFFILIATES, FAIRHOPE ALABAMA Many other countries have imposed tariffs on the U.S. and, from Trump's and many other people's perspectives, it is unfair to offer more free trade while we are being pillaged by other countries. These tariffs are not temporary, they seem to be here to stay. The rhetoric has caused a decrease in consumer spending and corporate spending. It has created a bad feeling about the future which is slowing down things. "You've seen the slowdown in capital projects and CEOs' comments on markets and economy." You cannot kill the market and tax revenue and squash the economy at the same time. In many ways, the market is the economic system. So, the biggest risk is that, if the economy is really messed up in one spot, even for a short time, where does the debt to GDP end up in such an environment? "What happens to fiscal deficits if there is a 10% or 5% decline in GDP and other economic indicators? That's when things get really scary." CHRIS ZACCARELLI CHIEF INVESTMENT OFFICER NORTHLIGHT ASSESSMENT, CHARLOTTE N.C. Tariffs will increase corporate costs and decrease profits. "If we see a change in the economy, the markets will react differently, but for now, the knee-jerk reaction to price increases is the first one." PETER CARDILLO CHIEF MARKET ECONOMIST, SPARTAN CAPITALSECURITIES, NEW YORK Now, it depends on the trading partners. Will they negotiate at the table or will they retaliate?" The effects of inflation could worsen and we could be heading toward recession." The markets are under severe pressure, and one could say that they have reached an oversold state. "I think the markets will rally." FREDERIQUE CARRIIER, HEAD of INVESTMENT STRATEGY, RBC Wealth Management "We expect the EU will retaliate quickly." "Europe will face steep blanket tariffs of up to 20%, which is higher than what was feared." Profit taking on the European equity market could continue tomorrow. The impact of tariffs is unlikely to be as painful on European economies, because Europe doesn't trade with the US enough. However, it could be more severe depending on the way the situation develops, the EU response, and the extent to which tariffs harm business and consumer confidence.
GRAINS-Chicago soya beans rise at biofuel coalition meeting
Chicago soybean futures rose Tuesday, ahead of a discussion between the U.S. Environmental Protection Agency and a coalition representing oil and biofuels groups to raise federal mandates on biomass diesel blends.
Analysts say that corn futures gained support due to wet forecasts for the U.S. Delta, Ohio Valley and Midwest, while wheat futures grew on the back of reduced acreage, as reported in a U.S. Department of Agriculture (USDA) report on Monday.
The Chicago Board of Trade's most active soybean contract settled at $10.34-1/4, its highest level since March 6, and CBOT corn finished up 4-1/2cents at $4.61-3/4, while wheat rose 3-1/2 cents to $5.40-1/2 per bushel.
Jim McCormick of AgMarket.net, a founding partner, stated that the news that a newly-formed coalition of oil groups and biofuel groups including the American Petroleum Institute was meeting with EPA representatives on Tuesday drove soybean oil futures higher on Tuesday.
The coalition wants to see biomass diesel blend mandates raised from 5.5 billion up to 5.75 billion. McCormick said that the new mandate would represent a dramatic increase from the current 3,55 billion.
McCormick said that the forecast of heavy rains in the U.S. Delta region and Ohio River Valley will also support corn production.
He said, "It isn't a big problem yet but we won't be planting very quickly in that part of the country."
The futures for wheat continued to rise as a result of the USDA's release on Monday of prospective planting data. The USDA's planting forecast for 2025 showed that the U.S. area of wheat would be lower than analyst expectations.
McCormick reports that the grain markets are still bracing themselves for President Donald Trump to announce tariffs on 2 April. This prospect continues to raise concerns about retaliation by other countries against U.S. agricultural exports. Renee Hickman reported from Chicago. Reporting in Paris by Gus Trompiz, and Ella Cao, Mei Mei Chu and Mei Mei Chu from Beijing. Editing by Aurora Ellis.
(source: Reuters)