Trump Starts Trade War: Steel Tariffs Drag Jack Daniels, Hogs Into Absurd Transatlantic Tit-For-Tat

So everyone knows Trump’s trade war idea is misguided.

I mean sure, he’ll be able to extract some halfway plausible talking points in defense of his increasingly aggressive trade stance from the few ostensibly smart people around him to the extent he’s managed to turn them into sycophants, but rolling back decades of progress on international trade and globalization is a fool’s errand.

Nobody thinks this is conducive to long-term prosperity. It’s just like his tax cuts and fiscal stimulus – myopic and indicative of an approach that’s self-centered as it’s aimed solely at bolstering his image at the expense of pretty much everything else.

 

On Thursday morning, Jerome Powell managed to deliver a more nuanced testimony on Capitol Hill than what came out of his mouth on Tuesday and his “success” at waffling on the economy and inflation looked like it might be enough to bolster equities.

And then the tariff headlines hit. This wasn’t unexpected (per se), but it’s pretty clear that everyone thought Trump was going to hold off on an actual announcement. Instead we got this:

• TRUMP: WILL PUT 25% TARIFF ON IMPORTED STEEL, 10% ON ALUMINUM

Then, in short order, FAZ reported that the EU is now pushing back with proposed tariffs on Harleys and Jack Daniels. And yes, I’m serious.

So, stocks took a dive:

Cue the VIX:

As Bloomberg notes, “since 1pm ET, underperforming sectors in S&P500 include semiconductors, autos and transport stocks, pushing S&P500 cash to ~1% lower on the day.”

Apparently, Cohn tried to stop this:

I'm told Cohn argued against tariffs in today's meeting. Argument was warned about higher prices, not a trade war. Trump's reaction, per a person in the room: That's "not the real world," and that result would be a "small price to pay"

— Kayla Tausche (@kaylatausche) March 1, 2018

Oh, and not only is the ink not dry, it’s not even on the page apparently:

ALSO: Trump told executives today the decision's been made, but the paperwork isn't done. Person in the room said Trump then turned to McGahn and said, "We're going to get those papers done, Don?"

— Kayla Tausche (@kaylatausche) March 1, 2018

The Canadians aren’t amused. “Trump’s announcement that he’ll tax steel and aluminum imports will trigger a global trade war,” Jean Simard, the head of a Canadian aluminum industry association said. “The president has just initiated an all-out trade war, because over and beyond impacting directly the tariffed countries, what it makes happen is that other markets in the world are going to have to do the same to protect their own markets,” Simard continued, adding that “Europe has to protect the continent from redirected metal that would flood the market there because America is not an open market anymore. So you’re going to see barriers go up in Europe”

And auto dealers aren’t pleased either:

From a statement by the American International Auto Dealers Association:@CNBC #tariffs pic.twitter.com/YtMsCfLiQ0

— Carl Quintanilla (@carlquintanilla) March 1, 2018

So yeah, you’re getting Trump’d.

If you’re wondering whether this might have an impact on inflation, the answer is “yes”, but I can’t imagine that the Fed wouldn’t look through that, despite this comment from Dudley today:

If tariffs go up, it will, at the margin, tend to put more upward pressure on prices, and those upward pressure on prices will have to be considered by the monetary authority.

Just to be as unequivocal as possible here: this moron is not good for your portfolio despite what you may have heard. You cannot paper over stupidity with bombast forever.

Donald Trump (right) is seen screaming at unidentified groundskeeper, for daring to use American lawnmower made from affordable imported aluminum and steel. pic.twitter.com/puKmAzeSa3

— DPRK News Service (@DPRK_News) March 1, 2018

Eventually, dumb shit is recognized for what it is.

In a major escalation of his trade agenda, Trump says the U.S. will slap a 25% tariff on steel imports and a 10% tariff on aluminum imports to protect national security https://t.co/hRVZUJh9Dt #tictocnews pic.twitter.com/kickW9I0BG

— Bloomberg Originals (@bbgoriginals) March 1, 2018

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