- President Donald Trump pledged to impose tariffs on steel and aluminum while also vowing to impose more duties soon after that. But so-called reciprocal tariffs may be a sign that even harsher measures may be off the table.
Wall Street brushed aside President Donald Trump’s latest tariff threats as stocks rallied despite his plans to target key industrial metals and impose retaliatory duties.
On Monday, Trump is expected to announce 25% tariffs on steel and aluminum with so-called reciprocal tariffs due to come out later this week. That comes after a week of whiplash, when he announced levies on Mexico and Canada then put them on hold, while allowing tariffs on China to take effect before later suspending taxes on its low-cost imports.
“So far, I’d say the news that we’ve seen on tariffs—they’ve had more bark than bite, meaning they’ve proven to be opportunities for investors to buy,” Fundstrat’s Tom Lee told CNBC on Friday.
While duties on steel and aluminum would hike prices for manufacturers like automakers, they would have less overall impact. For example, America’s top source of the imported metals, Canada, sends $7 billion a year in steel and $9 billion in aluminum to the U.S. That’s just a fraction of the nearly $500 billion in goods and services from Canada.
Then there are reciprocal tariffs, which would see the U.S. Imposing import duties that match another country’s tariffs on American products.
“If they are charging us 130% and we’re charging them nothing, it’s not going to stay that way,” Trump told reporters on Air Force One on Sunday.
While it could represent a major escalation of his effort to reshape global trade in America’s favor, again, it may be more bark than bite.
“We view this as a positive development given that Trump previously planned to impose a uniform 10%–20% tariff on all U.S. Imports,” market veteran Ed Yardeni said in a note over the weekend. “The reciprocal approach leaves plenty of room for the U.S. To negotiate tariff cuts by each of America’s trading partners separately. They’re Trump’s ‘art of the tariff’ deals!”
Yardeni added that the use of reciprocal tariffs suggests Trump may be abandoning the idea of a uniform tariff aimed at raising revenues.
When asked to comment, the White House deferred to the president’s remarks on Sunday.
Trump has already signaled openness to negotiations on tariffs. Last week, he agreed to pause duties on Canada and Mexico for 30 days after they pledged more border security.
In an interview with Fox News before the Super Bowl on Sunday, he indicated more demands are on the way, saying what the two countries have promised so far is “not good enough.”
“Something has to happen. It’s unsustainable, and I’m changing it,” he said after being asked if more has to happen in 30 days.
