March 8, 2018 / 9:09 PM / 2 months ago

UPDATE 1-INSTANT VIEW-Trump sets steel and aluminum tariffs; Mexico, Canada exempted

 (Adds comments)
    NEW YORK, March 8 (Reuters) - President Donald Trump pressed
ahead with the imposition of 25 percent tariffs on steel imports
and 10 percent for aluminum on Thursday but exempted Canada and
Mexico, backtracking from earlier pledges of tariffs on all
countries.
    
    Story:                     
        
COMMENTS:
    
    ETHAN HARRIS, CHIEF ECONOMIST AT BANK OF AMERICAN MERRILL
LYNCH: 
    “Our view on the tariffs is that we should be viewing the
situation as an ongoing process that’s going to continue
indefinitely into the future. The U.S. trade representative has
a long list of potential additional measures they could be
taking.” 
    “A lot of the things we’re seeing now like the aluminum and
steel tariffs are not new – we’ve seen those same kind of
protectionist measures before and so it’s a well-worn playbook.”
    “At this stage all of those things which have come to
fruition have been pretty small from a macroeconomic point of
view, so we haven’t changed our forecast on any of this.” 
    “I think the thing we need to watch for is whether we see
something that’s much more aggressive... For example, in the
case of the steel and aluminum tariffs, is there a retaliation
from Europe and does that in turn cause a counter-retaliation
from the Trump administration.”
    
    DAVID KOTOK, CHAIRMAN & CHIEF INVESTMENT OFFICER, CUMBERLAND
ADVISORS SARASOTA, FLORIDA 
    "It is good news to see Canada and Mexico carve out.  It is
also good news to see some flexibility on others.  The whole
theme of tariffs, quotas, barriers is still troubling.  No one
wins in a trade war."  
    
    SHAUN OSBORNE, CHIEF CURRENCY STRATEGIST AT SCOTIABANK
    "I think he (Trump) has been walked off the ledge of a broad
imposition of tariffs. We have seen a bit of a positive reaction
in the CAD to that news when it first broke.
    "Probably a sigh of relief to the extent that it is not
going to get slapped on Canada straight away. The U.S. is
clearly tying this to getting what they want out of NAFTA. The
game is not over at this point yet because what they want and
what Canada can readily give, there may still be some light
between those two points. So I wouldn't say the risk has been
lifted entirely but it's much better than it looked for Canada,
certainly late last week."
    
    MICHAEL O’ROURKE,  CHIEF MARKET STRATEGIST, JONESTRADING,
GREENWICH, CONNECTICUT:
    "He dialed it back a little bit, but they're still tariffs,
and we're still going in the wrong direction from a policy
perspective if you're a markets-focused globalist. I wouldn't be
surprised if he comes out with different tariffs on other
things." 
    
    DENNIS DICK, HEAD OF MARKETS STRUCTURE, PROPRIETARY TRADER
AT BRIGHT TRADING LLC IN LAS VEGAS
    "The tariff thing is a big hangover for the market. It likes
the idea of exempting Canada and Mexico and possibly exempting
other countries too. It is confusing. You've a lot of political
confusion coming out of the White House." 
    
    CHUCK CARLSON, CHIEF EXECUTIVE OFFICER AT HORIZON INVESTMENT
SERVICES IN HAMMOND, INDIANA
    “This is something that bites less than what the rhetoric
was last week. I think it is still kind of a fluid thing as
well... It’s a softer play on the idea then the original sky was
falling reaction last week when it sounded like it was going to
be across the board, no ifs, ands or buts, and everybody was
just going to get hammered.”
    “As is his style, this is the first gambit in a negotiation.
He’s trying to leverage this with NAFTA and he’s trying to
leverage it with some other agreements.”
    “There’s probably a bit of a sigh of relief here. Because of
the fluidity of the whole thing, there’s a belief that we’re not
going to get the worst, that we’ve left the door open to avoid
trade wars and to modify this.”
    “This might simmer down some of the volatility that has been
in the market from a trader’s mentality, and I don’t think the
ramifications of this are going to be the sort of significant
impact on the market that could sway the market’s primary
direction.”
    
    JOHN CAREY, PORTFOLIO MANAGER, AMUNDI PIONEER ASSET
MANAGEMENT, BOSTON: 
    “There’s been a little improvement in (the market). Perhaps
people perceive the statement as being more moderate and
flexible than what they originally anticipated. There are some
legitimate strategic concerns there, for our continuing to have
the production capability for high-grade steel and aluminum, but
on the other side, there’s some economic risk we have to be
careful about. It’s still early days in negotiation, so we have
to see what all the responses are from other countries, whether
they will be doing something to retaliate.”
    
    BORIS SCHLOSSBERG, MANAGING DIRECTOR OF FX STRATEGY, BK
ASSET MANAGEMENT, NEW YORK
    “This is not really tariff. It’s more theater. This is much
tamer than what we had expected initially. The interesting open
question is whether there is more to come. Will it become
contentious with China and intellectual properties? That could
be a more of a dangerous game to play. You would have the No.1
and No. 2 economies in the world going at it and become
contentious? Will Trump go toe to toe with the Chinese?" 
    
    MARK GRANT, CHIEF GLOBAL STRATEGIST AT B. RILEY FBR INC,
FORT LAUDERDALE, FLORIDA:  
    “I think it is a positive for two of our most important
trading partners. But the news is problematic for the EU
(European Union) so let’s see how they respond. Do I think this
will turn into a trade war? No. Do I think there will be some
retaliation? Yes. I do expect other tariffs over the next few
months. I think both bond and stock markets were fearful
initially that this would lead to a trade war and the end result
is that things have certainly calm down. I honestly think
President Trump is trying to strengthen America’s hand and will
probably be doing more of that.” 
    
   KIM FORREST, SENIOR PORTFOLIO MANAGER AT FORT PITT CAPITAL
GROUP IN PITTSBURGH
   "My dad had a great saying – don’t cry until you are
hurt. Apparently there are no real tariffs being put in
place. It’s more of a bid to bring trading partners to the
table."
    
MARKET REACTION: 
    
STOCKS: U.S. stocks extended gains ahead of the announcement, as
the AP reported key details. The S&P 500        was last up 0.2
percent.   
    
BONDS: U.S. treasury bond yields rose slightly, then dipped.
                
FOREX: The Canadian dollar and Mexican peso gained against the
U.S. dollar. The U.S. dollar index        gained slightly then
dipped. 
    
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