- US to impose tariffs on both Steel and Aluminium imports
- Levies will impact EU, Canada and Mexico
- FX shows immediate reaction; could weigh on stocks
This afternoon Commerce Secretary Wilbur Ross has announced that the US will begin levying tariffs on both steel and aluminium from the EU, Canada and Mexico as soon as tomorrow. The 3 trading partners had received exemptions from the tax when it was first proposed, but after negotiations with these countries failed to yield any acceptable progress as far as Washington is concerned they have allowed the exemptions to expire.
The Canadian dollar is coming under pressure after the soft data and also confirmation that the US will impose tariffs on Canadian steel. Source: xStation
The duties will be for 25% on steel and 10% on aluminium and come into effect from the 1 June. The market reaction in the effected metals has been fairly subdued, with aluminium higher on the day but only by around 0.5% at the time of writing. Some of the clearest moves can be seen in the Canadian dollar and Mexican Peso with both currencies seeing pretty notable drops against the USD. We earlier noted that some soft GDP data had weighed on CAD and there are now pretty sizable declines seen across the board.
Talk of trade tensions has taken a backseat of late, with the focus being very much on European politics, but today’s announcement is a timely reminder that it remains a potentially major threat to the global economy. It remains to be seen if the countries impacted will declare reciprocal tariffs on US goods, but this could well mark an important point in the so-called trade wars.
The US500 has been hit with a wave of selling since the cash open with the market falling down to its lowest level of the day. Trade remains fairly choppy without a clear prevailing trend as the strong flush lower on Tuesday was met with a swift recovery during yesterday’s session. 27412 remains a potentially key resistance with a break above there marking the comeback complete while a fall below 2675 would offer shorts a chance to press home the advantage.
The US500 has turned lower at the star of the US session and remains in a fairly wide and choppy range. Source: xStation
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