MW Trump's steel and aluminum tariffs aren't rattling markets Monday. Blame investor fatigue.
By Vivien Lou Chen
Trump is expected to follow up soon with so-called reciprocal tariffs aimed at matching import duties imposed on the U.S. by other countries
It's been only three weeks since President Donald Trump took office and began to unleash an array of trade proposals, but investors already appear to have become inured to those pronouncements, including his latest regarding 25% tariffs on steel and aluminum.All three major U.S. stock indexes DJIA SPX COMP finished higher on Monday, while Treasury yields barely budged from where they finished last Friday. Meanwhile, the ICE U.S. Dollar Index DXY rose almost 0.3% to 108.32, although it was off its overnight highs. Gold prices settled at a fresh record high of $2,914.30 an ounce on anxiety over Trump's protectionist moves. The trade escalation was set to be announced on Monday, with Trump expected to follow up soon afterward with so-called reciprocal tariffs aimed at matching import duties imposed on the U.S. by other countries.
Financial markets were holding up relatively well for a number of reasons. One is the notion that tariffs are being seen as just one of a basket of policies that also include extending tax cuts, reducing regulation and fostering a pro-business environment, according to Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. Others cited a sense of doubt or confusion over which tariffs will actually be imposed, after a 30-day pause was placed last week on the 25% tariffs Trump announced on goods from Mexico and Canada.
"I have talked to many clients who have suggested that there's maybe tariff fatigue," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. He noted that while there was a "dramatic" reaction on Friday to the prospect of reciprocal tariffs by Trump - with the Dow finishing down by 444.23 points, or 1% - there were only some knee-jerk responses Sunday night to the president's talk of steel and aluminum tariffs that would affect countries such as Canada, China, Mexico, Brazil, Germany and South Korea. Read: Steel stocks cheer Trump's tariffs as companies combat 'unfairly priced' imports"There's some skepticism that tariffs will come to fruition because Trump could end up getting a concession" that allows him to change his mind, Chandler said via phone. He pointed to a CBS News poll taken from Feb. 5 to Feb. 7 that showed Trump has a 53% overall approval rating, even though more than half of the respondents oppose tariffs on Mexico, Canada and Europe - which suggests the president has room to keep using trade tactics.
The relative calm in financial markets was nonetheless marked by increasing concerns about the prospects of elevated inflation and slowing growth. A team at bond giant Pimco, for example, warned that tariffs on Canada, Mexico and China alone could raise U.S. inflation by 0.8 percentage points and reduce economic growth by 1.2 points in the first year.
"Market participants definitely care about tariffs, but it is so hard to figure out what will result in policy changes," said Eric Sterner, chief investment officer at Apollon Wealth Management in Mount Pleasant, S.C., which manages about $9 billion in assets.
Meanwhile, many investors appeared to be cheering recent strong corporate-earnings results. "We've had a really strong earnings season and are nearly two-thirds of the way through earnings results," Sterner said. "Seventy-seven percent of companies are reporting earnings above their estimates, which is above the 10-year average. Additionally, fourth-quarter earnings results are on track to record their highest year-over-year growth rate since the fourth quarter of 2021, so the fundamentals of corporate earnings is just a great story."
-Vivien Lou Chen
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(END) Dow Jones Newswires
February 10, 2025 16:17 ET (21:17 GMT)
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