US Stocks End Lower as Trump Announces Tariffs
US stocks ended lower on Friday (Jan 31), with indices losing ground after the White House said US President Donald Trump will implement on Saturday tariffs of 25 per cent on Canadian and Mexican imports and 10 per cent on Chinese goods.
Investor Uncertainty
Investors have been bracing for further tariff news after Trump has repeatedly warned about using the measure. Uncertainty over the impact of tariffs has muddled the outlook for the economy and inflation.
Tariff Announcement
Reuters earlier quoted sources familiar with the tariff deliberations as saying that Trump would announce tariffs on Canadian and Mexican imports on Saturday but delay collection of the duties until Mar 1.
A White House spokesperson called the report “false”. She said the duties would be published on Saturday and would take effect immediately. Stocks turned lower on the day following the White House comments.
Market Reaction
“I would have thought the market would be down more. It’s not just the announcement itself, which I think probably impacts a select number of industries. It’s whatever retaliation moves are taken,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
Economic Data
Earlier in the session, economic data reinforced expectations that the Federal Reserve would keep interest rates unchanged for longer.
US prices increased as expected in December, while consumer spending surged.
Conclusion
The announcement of tariffs by President Trump led to a decline in US stocks, with indices losing ground. The uncertainty surrounding the impact of tariffs has muddled the outlook for the economy and inflation. The Federal Reserve’s decision to keep interest rates unchanged for longer was reinforced by economic data.
FAQs
Q: What are the tariffs announced by President Trump?
A: President Trump announced tariffs of 25 per cent on Canadian and Mexican imports and 10 per cent on Chinese goods.
Q: When will the tariffs take effect?
A: The tariffs will take effect immediately, according to the White House spokesperson.
Q: How did the market react to the announcement?
A: The market reacted negatively, with indices losing ground.
Q: What is the impact of tariffs on the economy and inflation?
A: The impact of tariffs is uncertain, but it has muddled the outlook for the economy and inflation.
Q: What did the Federal Reserve do in response to the tariffs?
A: The Federal Reserve kept interest rates unchanged for longer, as expected, based on economic data.
