US bourbon and motorcycles are just two of the products the European Union is targeting with its own tariffs announced on US products. The moves were in response to Trump’s 25 per cent tariffs on steel and aluminum that kicked in earlier in the day.
Canada also hit back with tariffs announced on US tools, sports equipment and other products.
“We deeply regret this measure,” European Union President Ursula von der Leyen said. “Tariffs are taxes. They are bad for business, and worse for consumers.”
The question hanging over Wall Street is how much pain Trump will let the economy endure through tariffs and other policies. He’s said he wants manufacturing jobs back in the United States, along with a smaller US government workforce, more deportations and other things.
Even if Trump ultimately goes with milder tariffs, damage could still be done. The dizzying barrage of on -again, off -again announcements on tariffs has already begun sapping confidence among US consumers and businesses by ramping up uncertainty. That could cause US households and businesses to pull back on spending, which would hurt the economy.
On Tuesday, for example, Trump said he would double tariffs announced on Canadian steel and aluminum, only to walk it back later in the day after a Canadian province pledged to drop a retaliatory measure that had incensed Trump.
Several US businesses have said they’ve already begun seeing a change in behaviour among their customers.
Delta Air Lines sank 3 per cent to compound its drop of 7.3 per cent from the prior day, when the carrier said it’s seeing demand weaken for close-in bookings for its flights.
Casey’s General Stores, the Ankeny, Iowa-based company that runs nearly 2,900 convenience stores in 20 states, offered some encouragement. It reported stronger profit and revenue for the latest quarter than analysts expected thanks in part to strength for sales of hot sandwiches and fuel. It also kept steady its forecast for upcoming revenue this year.
Casey’s stock rose 6.2 per cent.
All told, the S&P 500 rose 27.23 points to 5,599.30. The Dow Jones Industrial Average fell 82.55 to 41,350.93, and the Nasdaq composite jumped 212.35 to 17,648.45.
In stock markets abroad, indexes rose across much of Europe following mixed sessions in Asia.
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In the bond market, Treasury yields edged up to regain more of their losses from recent months sparked by worries about the US economy’s strength. The 10-year Treasury rose to 4.31 per cent from 4.28 per cent late Tuesday and from 4.16 per cent at the start of last week.
Wednesday’s better-than-expected inflation report gave some encouragement when worries are high that Trump’s tariffs could drive prices even higher for US households after US importers pass on the costs to their customers.
It’s also helpful for the Federal Reserve, which had been cutting interest rates last year to boost the economy before pausing this year, partly because of concerns about stubbornly high inflation.
Worries had been rising about a worst-case scenario for the economy and for the Fed, where economic growth stagnates but inflation remains high. The Fed has no good tool to fix such “stagflation” because lower interest rates can push inflation higher.
“Trends that would suggest a cold economy and hot inflation are still in the early stages, but uncertainty remains high,” according to Phil Segner, senior research analyst at Leuthold.
Or, as Brian Jacobsen, chief economist at Annex Wealth Management, said: “The tariff story is just beginning.”
AP
