On Thursday, President Donald Trump shocked global markets by announcing steep tariffs on imported steel and aluminum. The president cited national security concerns and a desire to support domestic industries as the driving forces behind the tariffs.
The affected metals rose sharply, as the 10 percent tariff on aluminum and 25 percent tax on imported steel will increase the cost of foreign commodities, while domestic producers will likely raise their own prices to increase profits. This resulted in aluminum nearing a two-year high at 17 cents per pound, while steel exploded to a six-year high of $840 per ton, prices that elated domestic metals producers and metalworkers who could see a more secure job outlook.
Meanwhile, foreign governments lambasted the tax, suggesting that these trade restrictions could elicit reactionary tariffs against U.S. goods.
For U.S. manufacturers of cars, planes and machinery, the tariffs present a two-fold threat. Steel and aluminum are a major expense for these industries, so rising costs will hurt their bottom lines. Meanwhile, they may also face retaliatory tariffs from foreign countries against the goods they export, hurting their ability to sell overseas.
This prompted a steep stock market selloff and a sharp rebuke from industry leaders as well as prominent GOP leaders, including House Speaker Paul Ryan and Pennsylvania Senator Pat Toomey.
For the average American, economists expect higher costs for goods that depend on the metals, which include everything from houses and cars down to appliances and pop cans.
Trade war could hurt farmers.
Alongside foreign countries and U.S. manufacturers, worries rose last week across rural America about looming trade wars.
The main suppliers of foreign steel are Canada, Brazil, South Korea and Mexico, all major consumers of U.S. agricultural products. Many in the agricultural industry fear that retaliatory measures from these countries could hurt U.S. exports of meat and grains.
These fears led to a slaughter in the livestock markets, with live cattle futures trading at a six-week low on Friday under $1.22 per pound and hogs falling to a two-month nadir under 67 cents per pound.
Grains were more resilient in the wake of the news. Corn, wheat and soybeans all reached the highest price in over a year last week because of ongoing weather concerns in South America and the U.S. Great Plains, and by midday Friday they had only given up a portion of their gains.