Question

What are your thoughts on how the potential tariffs being imposed will impact the stock market?

Answer 1

Stock market has been extremely affected since the potential tariff has been imposed by the USA government through the sensational tweet of USA President Donald Trump.

This political influenced decision has been acted as one of the most extreme path converter decision which push down stock market to non acceptable lower level.

By the time chinese government had too imposing higher tariff on US oriented material which has been taken this war to the point where solution is very next to impossible. The time when President Trump tweeted his statement that trade wars are good , world stock market reflected an immediate response towards it. It is now, with China involved we have seen headlines such as " Asian shares slump on fears of a trade war between the US, China " and " Wall Street nosedives as investors flee on trade war fears "

Although the US stocks managed to rise slowly after President's tweet if we look at the broader spectrum, the confusion initiated with the fear of trade war will leave the higher burden on the shoulders of investors. It doesn't take a genius to work out there is confusion when there is uncertainty. I appeal to your logic for my source.

The ultimate impact of this confusion will be observed for several months ahead on the US economic performance. If the 25% tariff on steel gets materialized with impact to President Trump's actions, one may reasonably argue that the US stocks are expected to suffer . The red states will lose more with this trade war. European politicos knew that if they target domestic markets that are populated by Republicans, it will be much easier to force President's focus on this issue.

President Trump's recent announcements on tariffs should have created a threat to the US Stock market logic tells us as well as to the other nations that are involved in this trade war.

Let's not forget Canada, Mexico, and Australia are already exempted. Plus the announced tariffs cover hardly any US trade as the Goldman Sachs image below shows.

So why was there all this panic? The markets didn't crash. Go out and look at them. The reason for it being in the headlines was that it goes against decades of tariff reduction as evidenced by the image below:

"Investors can still hold their breath and feel little relaxed because the President is not in a mood to begin massive trade war on international grounds. But it doesn't mean that this new tariff plan will not leave any impact on US Stocks. It seems like genie has now come out of the bottle and the reverberations of US market will showcase tariff terror for several months and even years ahead."

The time when President Trump tweeted his statement that trade wars are good , world stock market reflected an immediate response towards it. It is now, with China involved we have seen headlines such as " Asian shares slump on fears of a trade war between the US, China " and " Wall Street nosedives as investors flee on trade war fears "

Although the US stocks managed to rise slowly after President's tweet if we look at the broader spectrum, the confusion initiated with the fear of trade war will leave the higher burden on the shoulders of investors. It doesn't take a genius to work out there is confusion when there is uncertainty. I appeal to your logic for my source.

The ultimate impact of this confusion will be observed for several months ahead on the US economic performance. I f the 25% tariff on steel gets materialized with impact to President Trump's actions, one may reasonably argue that the US stocks are expected to suffer . The red states will lose more with this trade war as conjectured by Goldman Sachs in the table below. European politicos knew that if they target domestic markets that are populated by Republicans, it will be much easier to force President's focus on this issue.

The tariff plan that is recently proposed by Trump was actually unexpected in the market and it seems fundamentally illogical as well. It drew sharp rebukes from the leaders of Republican Party. However, we cannot say that trade war is materialized but investors must keep on expecting some changes in the plan same as President does with most of his proposed initiatives in early days. If we have a look on the other popular political negotiations from President Trump in last few months, such as the attempt to repeal the Affordable Care Act or Immigration deal on DACA; it is expected that the dead horse of the trade war will affect the headlines for several weeks ahead.

Right after President Trump's tariff related announcement, the experts are now trying to determine the health of US Stock market for the coming future. They have some expectations from the halls of Congress that can act opposite to the White House. In case if the Republican legislators such as Senate Majority leader Mitch McConnel and House Speaker Paul Ryan somehow force President Trump to control the trade war, investors can feel little relaxed. Some experts say that if GOP fails to grab the bait that is currently being offered by American Trading Partners, there are chances that president will push his lunacy with a certain degree of success.Trump has threatened a 25 percent tariff on steel imports and 10 percent on aluminum, without exemptions for any countries.

Analysts caution that the Trump administration's plan lacks details, but say tariffs would hurt manufacturers.

"Domestic producers of steel would make more money, while domestic consumers of steel would make less money," said Steve DuBuc, a director at consulting firm AlixPartners' automotive and industrial practice, noting that U.S. steel makers will "have increased pricing power" as steel imports become more expensive.

And because most aluminum is imported, costs would rise.

Polaris Industries Inc (PII.N), a manufacturer of snowmobiles, off-road vehicles and motorcycles, spends more than $300 million annually on steel and aluminum. Chief Executive Officer Scott Wine said tariffs would raise its costs around 1 percent, which is "quite manageable."

But he said Polaris would then have to "mitigate the inevitable price increases from our domestic steel suppliers."

U.S. automakers stand to be among the most impacted. The sector accounted for 26 percent of U.S. steel demand in 2017, behind the construction industry's 40 percent, according to data provider Statista.

Even before Trump's announcement, Ford Motor Co (F.N) was struggling with higher commodity costs.

CONCLUSION:

Due to Extreme fall down in stock market funds has been reached to non acceptable lower level altogether market index is behaving negative. Hence, No. of Investor whom are fetching out there funds and capital are increasing at an boom speed.