Trump administration levies tariffs on EU, Canada and Mexico
May 31, 2018
President Trump announced new tariffs on aluminum and steel imports from Canada, Mexico, and the EU; Pending home sales are down while consumer spending is on the rise.
- Trump administration levies tariffs on EU, Canada and Mexico. President Trump’s trade spats over aluminum and steel importation have boiled over into tariffs on imports from the EU, Canada and Mexico. This announcement comes as the President’s comments about halting German car importations to President Macron were made public, deflating German car stock prices and sparking fears of additional trade restrictions. The three trade partners lobbied the administration intensely to get exemptions to the tariffs over the past several months. These tariffs are significant as nearly 50% of US imports of these materials come from Canada, Mexico and the EU. The US Chamber of Commerce decried the move, saying tariffs have already resulted in a 50% increase in the price of steel in the US. Several members of the Republican party criticized the President’s move, calling the decision “dumb” and saying that it would antagonize American allies. Several European Union, Canadian and Mexican trade spokespeople indicated the tariffs would result in a WTO complaint and retaliatory tariffs on US products, such as bourbon, pork, motorcycles and other goods. [The Hill]
- Pending home sales down in April. The National Association of Realtors’ pending home sales index fell 1.3% from March’s reading of 107.6, indicating the housing market is less robust than even last year. The index reading for April of 106.4 is also down 2.1% from April of 2017, despite economists’ expectations that home sale contracts would increase this month. [Reuters]
- Consumer spending speeding up. US consumer spending increased by the biggest margin in 5 months during the month of April, indicating that second quarter economic growth will likely pick up from 1st quarter’s sluggish figures. Unemployment applications also dropped further than expected, as consumer spending increased 0.6% over the course of the month. Non-durable goods in particular picked up speed, growing 0.9% over the month of April. Inflation has remained relatively stable as well, with the PCE ticking up 0.2% this month, indicating the Fed will likely continue its plan of gradual rate hikes through the conclusion of 2018. [Reuters]