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Good Trump, Bad Trump: S&P 500, Dow Jones Rallied On Trump Tax Cuts, But Here Come Trump Tariffs | Stock News & Stock Market Analysis

Futures for the S&P 500 index, Nasdaq 100 and Dow Jones industrial average were mixed early Friday morning after President Trump’s vow to impose steel tariffs triggered a sell-off  on Thursday. Investors won’t sleep easy: The stock market rallied strongly after Election Day on Trump tax cuts and deregulation, but the president is turning his attention to protectionist measures that could spark a trade war.

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Global industrial giants  such as Boeing (BA), United Technologies (UTX), Caterpillar (CAT) and General Motors (GM) are obvious potential losers, but a trade war could turn much of corporate America into losers, including tech titan Apple (AAPL).

Bottom line? A stock market that has relied on “Good Trump” for outsized gains now faces “Bad Trump” adding to pressure even as the Fed and other central banks continue to shift to a tightening stance after years of ultra-easy monetary policy.

Boeing, United Tech, Caterpillar and Apple are all Dow Jones components, while those four stocks and GM are S&P 500 index members.


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S&P 500 index futures fell nearly 0.1% vs. fair value. Dow Jones futures slid 0.3% vs. fair value. Nasdaq 100 futures rose 0.2%.

Trump Tariff On Steel

On Thursday Trump said he will slap a 25% tariff on foreign steel and a 10% levy on imported aluminum on national security grounds. That boosted steel and aluminum stocks, but the move will mean higher costs for GM and other automakers, Boeing, Caterpillar and many others. That will also mean higher costs for consumers. Boeing shares fell 3.5% while Caterpillar lost 2.85% and United Tech 3.3%. GM tumbled 4%, hitting its worst levels since September. GM reported weak U.S. auto sales Thursday, but much of the stock loss followed Trump’s tariff move.

Worse, several other countries have threatened retaliation, raising the risk of a broader trade war. President George W. Bush backed off his 2002 steel tariffs as the European Union was poised to impose tariffs in response. But Trump, who has consistently supported protectionist measures for decades, may be willing or even eager to wage a tit-for-tat trade war.

Retaliation by Canada and Mexico over steel tariffs could poison talks on Nafta. Trump could make good on threats to exit that trade pact, roiling supply chains throughout North America.

China could restrict Apple iPhone sales via a variety of measures, giving a boost to local rivals that have already been grabbing big market share. The European Union could be even more aggressive on U.S. internet giants Facebook (FB) and Alphabet (GOOGL)-unit Google. Apple fell 1.75%, still close to record highs. Facebook and Alphabet lost 1.3% and 2.9%, respectively.

Of course, the Trump tax cuts are only now kicking in, providing a big boost to corporate profits and lifting economic growth. But many of those gains have already been priced into stocks.

Meanwhile, the Federal Reserve is likely headed for three rate hikes in 2018, but investors are worried that policymakers may be more aggressive.

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