U.S. Trade Threats Continue to Pressure Markets
Wall Street may have rallied on Friday, but investors are worried that things will turn south quickly as new waves of tariffs are implemented throughout the week. The Nikkei 225 ended 2.21 percent lower, the Shanghai Composite closed 2.52 percent lower, and the Kospi closed down 2.35 percent lower.
All European indexes were trading lower on Monday. Wall Street is also set to open lower after Washington announced the proposal of a bill that would allow the White House to raise tariffs without congressional consent. If the bill passes, it would be a direct abandonment of the World Trade Organization guidelines. As reported by Reuters, U.S. Treasury Secretary Steven Mnuchin has stated publicly that rumors of President Trump’s plans to leave the WTO were “wrong” and “an exaggeration.”
The euro was lower during the London trading session after traders showed concern that the impending tariffs would impact demand. It was trading 0.39 percent lower at $1.1639 as of 1:14 p.m. GMT. The dollar remained strong against its primary trading partners.
According to U.S. Commerce Secretary Wilbur Ross, there is no anticipated level of drop in the U.S. stock market that would make President Trump change his stance on trade. Ross told CNBC that “The president is trying to fix long-term problems that should have been fixed a long time ago.” He continued that “There is obviously going to be some pulling and tugging as we try to deal with some very serious problems. There will be some hiccups along the way.”
The European Union has warned of additional tariffs if the U.S. tariffs on automobiles comes to fruition as planned. The EU has condemned the tariffs, saying that they were unjustifiable.