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Analysis: Negative Reaction To Trump's Tariffs Could Make Him More Likely To Act

Analysis: Negative Reaction To Trump's Tariffs Could Make Him More Likely To Act

If investors are hoping that the negative Wall Street pushback to President Donald Trump’s recently announced tariffs on steel and aluminum will convince Trump to change his mind, their hopes may be very misguided.

This criticism may actually make Trump’s commitment to the tariffs even stronger, Height Capital Markets analyst Clayton Allen said in a Monday note. 

The White House will try to finalize the tariffs sometime this week to garner as much support as possible for Republican Rick Saccone, who is running in a special House election in the Pittsburg area March 13. Ironing out the legal and procedural details of the tariffs is a tedious process that could make such an "aggressive" deadline difficult to meet, Allen said.

In the meantime, reasonable arguments from Wall Street analysts against the tariffs and a potential trade war are likely falling on deaf ears, the analyst said. 

“We believe this aggressive trade action is primarily driven by President Trump's personal desire to appear tough,” he said. “The fact that Trump's announcement received such significant pushback is likely only strengthening his commitment to act.”

Pressure from Congress could be the best hope for delaying Trump’s tariff decision, Allen said. Several Republican congressman have criticized the tariffs, and congressmen representing districts that could be hit hard by a trade war are particularly concerned. The EU has already indicated it is willing to retaliate with its own tariffs on U.S. exports, specifically mentioning Harley-Davidson Inc (NYSE: HOG) as a potential target.

Harley is based in Wisconsin, which is both a swing state and home to Speaker of the House Paul Ryan.

Lobbying from the business world could also influence Trump’s ultimate decision, according to Height Capital Markets. 

Related Links:

What Is A Tariff And What Does It Do?

Trump's Steel Tariffs Are Stronger Than The Market Expected, Says Longbow Analyst

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