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Market Overview

Trump: 'Trade Wars Are Good And Easy To Win'

Trump: 'Trade Wars Are Good And Easy To Win'

The markets slid sharply Thursday after President Donald Trump announced he would impose 25-percent steel tariffs and 10-percent aluminum tariffs as early as next week.

Amid backlash from economists, national security experts and foreign leaders, Trump defended his position on Twitter.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” the president tweeted early Friday.

What Experts Say

Peterson Institute President Adam Posen called the perspective “straight up stupid” and said the tariff, which is meant to scare China, will most hurt military allies in Western Europe, South Korea and Japan.

“This is going to scare markets, but it’s not going to scare the Chinese government,” Posen said. “It’s going to lead to retaliation possibly, and that’s where things get bad.”

The European Union has already confirmed its intent to fight back.

“We strongly regret this step, which appears to represent a blatant intervention to protect US domestic industry and not to be based on any national security justification,” Jean-Claude Juncker, president of the EU, said in a press release. “ ... The EU will react firmly and commensurately to defend our interests.”

Juncker said the commission will soon propose countermeasures compatible with World Trade Organization policies “to rebalance the situation.” Canada responded similarly.

Still, some experts doubt the struggle will escalate.

"I don't believe any country in the world is going to retaliate,” economist Peter Navarro told Fox Business. “They know they are cheating us."

One market analyst was similarly optimistic.

“I do not expect some large global trade war, I just think some adjustments are going to be made,” B Riley chief global strategist Mark Grant told CNBC.

Additionally, both he and CNBC’s Mike Santoli considered the tariff news additive to ongoing market worries and attributed Friday’s decline in part to the ongoing corrective phase.

What To Watch For

Height Securities analysts are watching the reactions of Congressional leaders as indicators of the tariffs' prospects.

In the long term, they are monitoring the continued tenure of chief economic adviser Gary Cohn, an opponent of tariff strategies, which will signal the administration's level of commitment to aggressive protectionist policies.

Related Links:

US Steel, Aluminum Stocks Rally After Commerce Dept. Calls For Tariffs

Analyst: Steel Investors Need Action From Trump, Not Words


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