Dow plunges as Trump promises tariffs on steel

Some manufacturers worry 25% import tax could spark trade war

President Trump said Thursday he will impose heavy tariffs on imported steel and aluminum that could increase American jobs in those sectors but also raise prices.

The actions could hurt a number of industries including automakers and suppliers, boat and plane manufacturers and even beer companies.

There’s also concern the move could trigger a “trade war” in which countries would retaliate by imposing tariffs, or other measures, in response.

Speaking to more than a dozen steel and aluminum executives at the White House, Trump said he would sign tariffs of 25% on imported steel and 10%

on imported aluminum next week.

“It’ll be for a long period of time,” Trump said during the meeting with executives from U.S. Steel, AK Steel, Arcelor Mital, Nucor and other producers. “We’ll be signing it in. And you’ll have protection for the first time in a long while, and you’re going to regrow your industries. That’s all I’m asking.”

The president also said that dumping of cheap, imported steel and aluminum “destroys our companies and our jobs.” He added to the executives, “People have no idea how badly our country has been treated. ... Or if they did, then they should be ashamed of themselves because they’ve destroyed the steel industry, they’ve destroyed the aluminum industry and other industries, frankly.”

Stocks fell rapidly after the announcement, with the Dow Jones industrial average plunging as much as 586 points in the session, though they regained some of that later in the afternoon. The Dow lost 420 points, or nearly 1.7%, to close at 24,608.98. The Standard & Poor’s 500 index and Nasdaq each shed about 1.3%

“There’s a quiet concern among investors about the potential of a trade war,” says Jason Ware, chief investment officer and chief economist for Albion Financial Group. “Nobody knows what the real economic impact is and where it’s going to end.”

The move came even as some automakers, suppliers, business executives and members of Trump’s own Republican Party pushed back against the idea of rolling out tariffs amid worries they could raise prices or trigger a trade war, especially with China.

“The notion of a trade war is also scary because it could lead to higher costs and thus be inflationary in a general sense,” Ware said. “This very idea could be fanning the flames of fresh inflation anxiety that, in part, amplified recent volatility pushing down stock prices in February,” Ware said.

The Washington Post reported that China’s Foreign Ministry spokeswoman Hua Chunying on Thursday accused the U.S. of “disregarding the rules of the WTO (World Trade Organization)” and that “China will take proper measures to safeguard its legitimate rights and interests.”

While Detroit’s auto manufacturers have been cautious about criticizing the president, auto suppliers have said clearly that tariffs could severely damage their businesses, though depending on how the tariffs are implemented, there could be a process put in place through which they could seek exemptions from the duties.

Meanwhile, the Association of Global Automakers — a trade group of international automakers and suppliers doing business in the U.S. that includes Toyota, Honda and others — as recently as Wednesday urged against tariffs and quotas saying they could force auto prices and those of other consumer goods higher.

“With one stroke of the pen, much of the promised benefit of tax reform ... could be undercut.” John Bozzella Global Automakers’ president and CEO

“With one stroke of the pen, much of the promised benefit of tax reform and other administration initiatives aimed at reviving manufacturing and protecting national security could be undercut,” said John Bozzella, Global Automakers’ president and CEO, who cited an analysis of steel tariffs put in place in 2002 that he said cost some 200,000 jobs nationwide, including 30,000 in Michigan, Ohio and Pennsylvania.

“More expensive steel and aluminum will not simply raise the price of cars and trucks,” he added. “It will increase the price of any and all goods that use (them) — Air Force planes, Navy ships and Army vehicles.”

It wasn’t just automakers complaining: the National Marine Manufacturers Association also put out a statement Thursday saying the tariffs will drive up the cost of recreational boats and fishing vessels of all kinds. Beer maker MillerCoors tweeted late Thursday that it was “disappointed with President Trump’s announcement of a 10% tariff on aluminum.”

Detroit Free Press staff writers Phoebe Wall Howard, Eric Lawrence and Susan Tompor and USA TODAY’s Paul Davidson contributed to this report.