Why the Market Isn't Worried About a Potential Trade War Anymore

March 5, 2018
Updated 16d ago

Immediately after President Trump announced potential tariffs on steel and aluminium last week, the markets had a meltdown. But as of Monday it appears the mantra is more “Keep calm, and move on.”

That’s because it’s becoming more clear that the import taxes probably won’t be as severe as anticipated, said Milton Ezrati, Chief Economist at Vested.

“Trump indicated today that this might be more of a bargaining chip than some kind of a permanent thing,” he told Cheddar on Monday.

“The other thing is that...there really is a lot more power on the opposition side than on the pro-tariff side.”

He pointed out that while the steel production industry employs about 140,000 people, the industries that consume the product employ about seven million.

“That’s a lot of power when the lobbying goes to Washington.”

This bold move is also just ‘classic Trump,’ added Ezrati. “This is the way he negotiates.”

“He demands the world and says, ‘If you think this is too harsh, give me something in return.’”

All of these factors combined worked to ease market worries and the Dow closed up more than 330 points on Monday.