President Trump’s big gamble this week could cause a paradigm shift in stock market psychology. He announced that next week the United States will impose 25 percent tariff on imported steel and 10 percent on aluminum. It threw global markets into a tizzy and the market sold off on the news! My speculation is Trump is playing right out of his 1987 book, “The Art of The Deal.”
NAFTA negotiations are underway between the United States, Canada and Mexico. Trump’s announcement of steel and aluminum tariffs is intended as a shot across the bow to those negotiators that he’s very serious about parlaying a fair deal from NAFTA participants for the United States or he will pull out! In other words, gambling that NAFTA partners will understand they’ve more to lose than the United States because our economy is larger than all of theirs combined. It’s in their best interest to negotiate in good faith, i.e., their governments stop placing unfair taxes on U.S. imports, subsidizing their corporations and stop unlawful dumping. If Trump’s gamble succeeds, he’ll be a genius! If his gamble fails, trade wars will ensue that will be disastrous for global economies and markets.
John Lutz, Atwater