US: Trump’s move to impose tariffs to spark retaliation - Rabobank

Markets are clearly concerned that Trump’s move to impose tariffs will spark retaliation from other countries or trade blocs, which could be the start of a trade war, according to analysts at Rabobank.

Key Quotes

“Although we have yet to see a response from China, Trump’s allies soon condemned the move. Australia called Trump’s announcement “disappointing”, while Canada outright said the tariffs are “unacceptable”, adding that the country will hit back if its metal industry isn’t exempted from the measures. European Commission President Juncker, too, stated that the EU “will react firmly and commensurately to defend our interests”.”

“Domestically, while some may benefit from these measures (the producers of these metals) their customers (industries further down the chain, as well as construction) will be faced with higher purchase costs. It remains to be seen to what extent they will allow these costs to eat away their margins, or whether this will have an impact on prices paid by consumers. Some industry representatives have already complained that these tariffs will be a “tax on US households”. Indeed, even if only transitory, the import duties could put some upward pressure on US inflation over the coming months.”