Steel and Aluminum Tariff News: Asian Markets Decline While U.S. Futures Rise

Global Markets React to Trump's Tariff Announcement Amid Ongoing Trade Tensions / Reuters 

Global stock markets showed mixed reactions on February 10 following U.S. President Donald Trump's announcement of a 25% tariff on all steel and aluminum imports, with reciprocal tariffs expected to be imposed later this week. While Asian markets generally trended downward, U.S. stock futures signaled a potential rebound, reflecting the complex global response to escalating trade tensions.

According to Bloomberg and other international media outlets, the MSCI Asia-Pacific Index, which tracks benchmark stocks from South Korea, Taiwan, and Vietnam, fell by 0.4%. In contrast, Japanese markets, along with Chinese and Hong Kong stocks—already subject to existing 10% tariffs—continued their upward momentum, driven by investor optimism surrounding artificial intelligence (AI) technology stocks. This divergence highlights the resilience of tech sectors despite broader market concerns over tariffs.

In Europe, the STOXX 600 Index climbed 0.3%, marking its eighth consecutive week of gains—the longest streak since March 2024. This positive trend suggests that European investors are relatively unfazed by the latest tariff developments, focusing instead on strong corporate earnings and economic recovery indicators.

Meanwhile, U.S. stock futures rose during early Eastern Standard Time trading, hinting at a potential rebound from last Friday's declines. The S&P 500 futures gained 0.3%, the Nasdaq 100 futures rose 0.5%, and Dow Jones Industrial Average futures increased by 0.2%. The U.S. dollar also strengthened against major currencies like the Canadian dollar and the Japanese yen, as investors anticipated heightened trade tensions potentially impacting global currency markets. This dollar rally reflects concerns that tariff-induced inflation could complicate the Federal Reserve's ability to lower interest rates in the near future.

The yield on the 10-year U.S. Treasury note saw a slight decline, indicating a modest shift toward safer assets amid the growing uncertainty. Investors are closely monitoring upcoming events this week, including Federal Reserve Chair Jerome Powell's speech and the release of the January Consumer Price Index (CPI) data, both of which could provide crucial insights into the U.S. economic outlook.

Bob Savage, Head of Market Strategy and Insights at BNY, noted, “Markets are reacting more to shifts in Trump’s trade policies than to traditional economic data.” Similarly, Philip Wool, Portfolio Management Director at Reliant Global Advisors, observed that U.S. equity traders are not overly concerned about the tariff news, viewing it more as a negotiation tactic rather than a long-term economic threat. This sentiment suggests that many investors believe Trump's tariff threats are primarily aimed at strengthening his position in trade negotiations.

While Trump has declared that the new tariffs will apply to all countries, he has yet to specify when they will take effect. Notably, tariffs announced on Canada and Mexico in the past were suspended shortly after being introduced, whereas those targeting China have remained in force. If the 25% steel tariff is implemented, South Korean and European Union (EU) steel products, which currently enter the U.S. duty-free, will be subject to the new levy. Chinese and Russian steel products, already facing a 25% tariff, will see their rate doubled to 50%.

U.S. Census Bureau data cited by Bloomberg reveals that as of late last year, Canada was the top exporter of steel to the U.S., with exports valued at $1.12 billion, followed by Mexico, Brazil, China, Taiwan, and South Korea, which accounted for $3.2 billion. In the aluminum sector, Canada again led with $9.5 billion in exports, followed by the UAE, Mexico, South Korea ($643.7 million), and China.

This is not the first time Trump has imposed such tariffs. During his first term in 2018, he implemented similar measures, levying 25% tariffs on steel and 10% on aluminum. While tariffs on products from countries like China, Russia, and India have remained in place, many other nations received exemptions after initial enforcement.

In addition to the steel and aluminum tariffs, Trump announced plans to introduce reciprocal tariffs on countries imposing duties on U.S. imports. He emphasized that these new measures would be implemented immediately, signaling his continued commitment to aggressive trade policies.

As global markets adjust to these developments, investors will be closely watching for further details on the timing and scope of the tariffs, as well as potential retaliatory measures from affected countries. The interplay between trade policy, economic data, and market sentiment will likely continue to shape financial markets in the coming weeks.