Closing post
Time to wrap up here… our US politics Live blog will be tracking the action on that side of the Atlantic.
To recap….
Financial markets are shrugging off trade war fears, after Donald Trump declared the US will impose 25% tariffs on steel and aluminium imports.
In London, the FTSE 100 has hit a new all-time high, touching 8,779 points for the first time ever, with housebuilders and mining stocks among the risers.
BP was the top gainer on the Footsie, after activist investor Elliott Investment Management took a stake.
Wall Street has opened higher, where shares in US steel makers rallied at the open – amid chat that tariffs will give them a competitive advantage to grow market share and lift their own prices.
Gold hit a new alltime high this morning to, rising above $2,900 per ounce.
Europe has vowed to respond to Trump’s threat, with German chancellor Olaf Scholz warning that “anyone who imposes tariffs must expect counter-tariffs.”
The UK government declined to comment, with Downing Street saying it has not seen details of Trump’s proposed steel and aluminium tariffs.
The UK steel industry is certainly worried, though.
Gareth Stace, director general of UK Steel, says:
The UK produces world-leading steel, supplying the US with high-quality products for defence, aerospace, stainless, and other critical sectors, materials that simply cannot be replicated elsewhere.
“At the same time, the introduction of further US tariffs will inevitably divert global trade flows, with excess steel potentially redirected to the UK market. This reinforces the urgent need for watertight UK trade measures in 2026 to prevent surges in imports following the UK’s steel safeguards expiry.
Accelerating the UK’s CBAM [Carbon Border Adjustment Mechanism] to 2026 would provide an additional layer of protection against unfairly priced steel. The UK Government must act decisively to shield our domestic industry from the fallout of rising global protectionism.”
Five former US Treasury secretaries have attacked the actions of Elon Musk’s new Department of Government Efficiency (DOGE), warning that America’s financial credibility is at risk.
Look out, New Delhi!
India has “enormously high” tariffs that lock out imports, US President Donald Trump’s top economic adviser Kevin Hassett has said today in a TV interview.
Hassett told CNBC that Trump believed the US should impose reciprocal tariffs that are at least equal to those imposed by other countries, adding:
“If they go down, we’ll go down.”
“Almost every trading partner has much higher tariffs than we do.
Hassett also noted that Canada, Mexico and the UK had tariffs in the same range as the United States.
As this chart from Deutsche Bank shows, India would be in the front line to be hit by reciprocal tariffs:
Updated
Wall Street opens higher as US steelmakers rally
Wall Street has opened higher at the start of trading in New York, as shares in steel makers rally.
The Dow Jones industrial average and the broader S&P 500 have both jumped over 0.5% at the open, with the Dow up 246 points at 44,550 points.
Cleveland-Cliffs, North America’s largest flat-rolled steel producer, have surged by 16% at the open.
Nucor Corporation, the Charlotte, North Carolina-based steelmaker, is up 6%.
New tariffs can help the US steel industry in two ways – either by driving away steel made overseas, or by allowing the American industry to raise its prices (because foreign-made steel will be more expensive).
Germany’s chancellor, Olaf Scholz, has warned that those who impose tariffs must expect retaliatory tariffs.
Reuters reports that Scholz told reporters at an election event in northern Germany:
“Currently, given that nothing is yet official, we can only say with great caution but great clarity: Anyone who imposes tariffs must expect counter-tariffs.”
GERMAN CHANCELLOR SCHOLZ ON TRUMP TARIFF THREAT: THOSE WHO IMPOSE TARIFFS MUST EXPECT RETALIATORY TARIFFS
— CGTN Europe (@CGTNEurope) February 10, 2025
Updated
The FTSE 100 index isn’t the only share index hitting a record high.
The pan-European STOXX 600, which includes the largest companies across the region, has hit a new alltime high today, as investors prove to be unphased by trade war fears….
Credit rating agency Moody’s has warned that the triple-A ratings of the World Bank and other top multilateral lenders would be at risk if the United States withdraws support for them
Last week, Trump signed an Executive Order to review US government support to all international intergovernmental organisations of which it is a member and to withdraw from some United Nations organisations.
In a report published this morning, Moody’s says:
“The US is a key shareholder in a number of rated MDBs (multilateral development banks), hence it would be credit negative if it materially reduced its commitment to them.”
Former US Treasury secretaries: Our Democracy Is Under Siege
Five former US Treasury secretaries have attacked the actions of Elon Musk’s new Department of Government Efficiency (DOGE), warning that America’s financial ccredibility is at risk.
Robert Rubin, Lawrence Summers, Timothy Geithner, Jacob Lew and Janet Yellen – collectively the 70th, 71st, 75th, 76th and 78th secretaries of the Treasury – have warned that the tradition that America’s payment system has historically been operated by a very small group of nonpartisan career civil servants has been upended, after Musk’s Doge team was granted ‘full access’ to the federal payment system.
Writing in the New York Times today, the distinguished quintet warn that the political actors at DOGE have not been subject to the same rigorous ethics rules as civil servants, and lack the training and experience to handle private, personal data.
They say:
While significant data privacy, cybersecurity and national security threats are gravely concerning, the constitutional issues are perhaps even more alarming.
We take the extraordinary step of writing this piece because we are alarmed about the risks of arbitrary and capricious political control of federal payments, which would be unlawful and corrosive to our democracy.
They point out that it is up to Congress to decide how US. federal dollars are spent, saying:
During our collective 18 years at the helm of the Treasury, we never were asked to stop congressionally appropriated funds from being paid out in full. Not since the Nixon administration has this type of executive action been contemplated. At that time, the Supreme Court ruled unanimously that the president did not have the power to withhold federal funds that Congress had authorized.
The federal payments system controls more than $6tn of federal cashflow each year, with millions of Americans depending on it for social security and Medicare benefits.
Rubin, Summers. Geithner, Lew and Yellen explain:
People often rely on these funds for survival, making any risk of their cutoff or delay existential. But even more than the importance of making good on particular commitments is the importance of making good on the principles that this country stands for.
We have during our service in the Treasury Department faced moments of crisis, when the specter of an American default loomed. Any hint of the selective suspension of congressionally authorized payments will be a breach of trust and ultimately, a form of default. And our credibility, once lost, will prove difficult to regain.
FTSE 100 hits record high as BP shares surge
Britain’s blue-chip share index has just hit a new alltime high, despite trade war worries.
UPDATED: The FTSE 100 index has touched 8,770.08 points, three point above the previous intraday high set last week when the Bank of England cut interest rates.
The rally is being driven by BP, whose shares are up over 7% after activist investor Elliott Investment Management took a stake in the UK oil company.
Updated
McDonalds hit by fall in US sales
Fast food giant McDonalds has reported a drop in sales in the US.
Like-for-like sales at American stores fell by 1.4% in the last quarter of 2024, the company reports.
The drop in sales is due to customers buying less at the till.
McDonalds says:
Comparable sales results for the quarter reflect a decline in average check, partly offset by slightly positive comparable guest counts
Global comparable sales increased by 0.4%, despite a fall in sales in some markets, “led by the UK”.
⚠️BREAKING:
— Investing.com (@Investingcom) February 10, 2025
*MCDONALD'S POSTS BIGGEST US SALES DECLINE IN NEARLY FIVE YEARS AS EARNINGS MISS ESTIMATES$MCD pic.twitter.com/ebVKw7wNSK
Bloomberg Economics have calculated that South America, Africa and southern Asia face the greatest shock if President Donald Trump makes good on his pledge for reciprocal tariffs.
Senior economist Maeva Cousin found that such tariffs “would be particularly painful for a number of emerging and less developed economies.” – because they currently impose higher tariffs than the US.
In contrast, she writes:
“Most advanced economies, in particular in Europe, apply tariff rates on US goods that are, on average, relatively close to tariffs applied to their own exports.
Still, there could be areas of tension, notably on agricultural products and cars.”
Here’s our news story about the jump in BP’s share price today:
Shares in European steelmakers have fallen today, in anticipation of new tariffs on their products at the US border.
ArcelorMittal, the Luxembourg-based multinational steel manufacturing firm, are down 2%.
German industrial engineering and steel production multinational ThyssenKrupp’s shares are down 0.8%.
Over in South Korea, Hyundai Steel’s share price dropped 2% today.
US steelmakers shares set to jump
Shares in US steelmakers are ralling in pre-market trading, as investors anticipate new tariffs on foreign imports of metal.
Cleveland-Cliffs, the American steel manufacturer based in Cleveland, Ohio, are up over 8% in premarket trading, as are Nucor Corporation, another large steel producer which also makes recycled steel.
Alcoa Corp, the aluminium producer, are on track to jump 5% when Wall Street trading begins in two hours.
New tariffs will make it harder for overseas companies to sell lower-priced steel on the U.S. market, supporting domestic producers. US steel makers could also potentially hike their own prices, to take advantage of the fact that overseas steel will cost more once it incurs a tariff too.
A spokesman for UK prime minister Keir Starmer has told reporters that Britain has not seen details of Donald Trump’s proposed steel and aluminium tariffs.
The spokesman says that while it was not possible to speculate on the impact of such tariffs without seeing details, Britain always prepares for all developments, saying:
“I haven’t seen any detailed proposals following reporting overnight, but we will obviously engage as appropriate.”
Europe: We will react to US tariffs
The European Union is signalling to the US that it would react to protect EU interests after US president Donald Trump’s announcement of impending metals tariffs.
However, Brussels is not responding until it has clarification about what the US plans too do.
In a statement, the European Commission said:
“The EU sees no justification for the imposition of tariffs on its exports.
We will react to protect the interests of European businesses, workers and consumers from unjustified measures.”
A European Commission spokesperson has told reporters today that the reciprocal tariffs proposed by Trump are also unjustified, saying:
“We believe that none of the potential measures outlined by the U.S. administration to date are justified.”
Trump indicated last weekend that he will announce reciprocal tariffs on Tuesday or Wednesday, under which the US would raise trade levels to the same level as it faces on its exports to other countries….
Community union: US needs UK's specialist steel
Community, the union for the UK steel union, are also very concerned about the prospect of new US tariffs on steel.
Alasdair McDiarmid, Community’s assistant general secretary, says new levies hit import of British Steel could hurt America:
“While we await full details and a formal policy announcement, the comments from the White House regarding new tariffs on steel are extremely concerning.
At a time of uncertainty for the sector, a punitive new tariff on UK steel exports would be hugely damaging and threaten jobs. For the US it would also be self-defeating, as the UK is a leading supplier of specialist steel products required by their defence and aerospace sectors.
Again, this just reinforces the need for a strong UK Carbon Border Adjustment Mechanism and for robust new measures to be put in place when existing safeguards expire to shield our steel sector from a surge in cheap imports.”
UK Steel fears "devastating blow" from Trump tariffs
Trade body UK Steel has warned that the imposition of US tariffs on UK steel would be “a devastating blow” to the industry.
UK Steel director general, Gareth Stace, says:
The US is our second largest export market after the EU. At a time of shrinking demand and high costs, rising protectionism globally, particularly in the US, will stifle our exports and damage over £400 million worth of the steel sector’s contribution to the UK’s balance of trade.
Stace says it would be “deeply disappointing” Trump decides to target UK steel, given its “relatively small production volumes compared to major steel nations”.
H explains:
The UK produces world-leading steel, supplying the US with high-quality products for defence, aerospace, stainless, and other critical sectors, materials that simply cannot be replicated elsewhere.
The danger, Stace adds, is that other nations decide to dump steel on the UK market to avoid US tariffs:
“At the same time, the introduction of further US tariffs will inevitably divert global trade flows, with excess steel potentially redirected to the UK market. This reinforces the urgent need for watertight UK trade measures in 2026 to prevent surges in imports following the UK’s steel safeguards expiry.
Accelerating the UK’s CBAM [Carbon Border Adjustment Mechanism] to 2026 would provide an additional layer of protection against unfairly priced steel. The UK Government must act decisively to shield our domestic industry from the fallout of rising global protectionism.”
Reminder: We don’t yet know if the UK will be subject to the 25% tariff on steel which Trump announced last night, or if exemptions will be available; British ministers said today they must ‘wait and see’ what the US does…
Updated
Ed Davey seeks crisis talks about Trump tariff threat
Liberal Democrats leader Sir Ed Davey is urging Prime Minister Keir Starmer to hold crisis talks with the leaders of Scotland, Wales and Northern Ireland to discuss the tariff threat from Donald Trump.
He said:
“Donald Trump’s latest threat of tariffs will plunge many into deep uncertainty – not least those working in our great British steel industry.
“Keir Starmer must immediately call a Four Nations summit with leaders across the United Kingdom, to agree a joint plan to protect our economy from Trump’s damaging trade war.”
Trump tariffs on steel and aluminium sold into the US is negative for markets on two levels, says Russ Mould, investment director at AJ Bell.
“First, it suggests the new US president has only just got started with America’s budding protectionist trade policy. Second, it extends the affected countries beyond Canada, China and Mexico to places like Germany, Brazil, Japan and South Korea.
“With the promise of further tariffs later this week, Trump’s actions threaten to cause considerable volatility on the markets over the coming days if there is a tit-for-tat response from affected countries.
“While stocks in the firing line such as ArcelorMittal and Hyundai Steel fell on the news, another part of the commodities sector enjoyed a bounce around speculation that activist investors were targeting the oil and gas space. Talk that Elliott had taken a stake in BP drove shares in the UK oil and gas giant up 7.5%, which in turn gave a 0.4% boost to the FTSE 100.”
MPs demand answers about Bank IT shambles
After a series of banking IT failures which have disrupted services for customers over the last couple of years, MPs are demanding answers.
Parliament’s Treasury Committee have wrtten to the bosses of the nine largest UK banks and building societies, asking how much disruption their customers have suffered over the last two years.
They also want to know how many customers were affected, and the amount of compensation that has been paid.
The letter comes after Barclays suffered an IT glitch that lasted for several days, during which time some customers saw outdated balances, or could not see their latest payment.
Chair of the Treasury Select Committee, Dame Meg Hillier MP, says:
“When a bank’s IT system goes down, it can be a real problem for our constituents who were relying on accessing certain services so they can buy food or pay bills.
For it to happen at a major bank such as Barclays at such a crucial time of year is either bad luck or bad planning. Either way, it’s important to learn what has happened and what will be done about it.
The rapidly declining number of high street bank branches makes the impact of IT outages even more painful; that’s why I’ve decided to write to some of our biggest banks and building societies.”
As tariffs are inflationary, they may make it harder for the US central bank to lower interest rates this year.
Currently the financial markets expect just one rate cut from the Federal Reserve during 2025, currently expected by July.
Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury, reckons the relative strength of the US economy will also make cuts to borrowing costs harder to justify.
“Trying to predict the next tariff update to hit the newswires is a bit of a fool’s errand, so it is perhaps more productive to focus more on the macroeconomic backdrop.
“Last week’s nonfarm payrolls report was, once again, consistent with a US labour market that remains strong. Companies continue to create jobs at a healthy clip, the unemployment rate is hovering around levels consistent with full employment, and the report showed a surprise uptick in wages in January - monthly earnings rose at their fastest pace since mid-2023.
“All of this positive economic news, plus the looming threat of price hikes from Trump’s tariffs, makes it increasingly difficult to justify any further interest rate cuts at all from the Fed in 2025.
“With rates in the US remaining almost the highest in the G10, we think that it will be difficult for the dollar to sell-off in spite of its admittedly very expensive levels.”
BP shares hit six-month high after Elliott builds stake
Shares in oil giant BP have hit a six-month high after activist investor Elliott Management took a stake in the company.
Traders are calculating that Elliott will push for an overhaul of BP’s strategy, and a shake-up of its board which could claim chairman Helge Lund.
BP’s shares are up 6.35% at 460.70p, the highest since last August, after Elliott’s stake was reported on Saturday.
BP shareholders may be impatient for improvement, as Richard Hunter, head of markets at interactive investor, says:
The shares have drifted by around 3% over the last year, in contrast to a gain of some 6% for rival Shell over that period and it remains to be seen whether this latest speculation will provide a shot in the arm for what has been a relatively disappointing period for the group of late
BP is due to release its latest financial results tomorrow, after recently setting out plans to cut thousands of jobs from its global workforce to save billions in costs and appease its worried shareholders.
BP has fallen out of favour with many investors since embarking on a plan to slash its oil and gas production in favour of spending billions on renewable energy projects…
More here:
Updated
Goldman: US immigration clampdown could hurt growth
Another one of Donald Trump’s policies, a crackdown on illegal immigration, could also hurt the US economy.
A new note from Goldman Sachs today predicts that net immigration into the US will slow to 750k per year, as the Trump administration increases border security, reinstates the “Remain in Mexico” programme, and ends several humanitarian parole programmes.
That would be a drop from an annualised rate of 1.7 million/year last December, Goldman say.
In that “baseline scenario”, lower immigration would lead to up to 40 basis points less growth per year – the equivalent of 0.1% off GDP each quarter.
But, Goldman warns, the economic consequences would be more serious in a scenario where Trump’s immigration crackdown creates a climate in which unauthorized immigrants are afraid to go to work or employers are afraid to employ them.
That’s because unauthorized immigrants already in the US account for 4-5% of the total workforce and 15-20% in some industries, Goldman says, adding:
Abruptly losing these workers could be very disruptive for many of these industries and have a larger inflation impact.
Wall Street futures higher
The US stock market is set to open higher, despite anxiety about more tariffs heading our way.
The Dow Jones industrial average, of 30 large US companies, is 0.27% higher in the futures market.
The broader S&P 500 index is expected to gain 0.33% when Wall Street opens in four and a half hours.
The tech-focused Nasdaq is 0.5% higher in pre-market.
This chart from XM shows how gold has been outperforming other assets this morning:
Achilleas Georgolopoulos, senior market analyst at XM, says:
Gold has recorded a higher high, trading at $2,897 at the time of writing… fueled by tariff concerns and US data pointing to higher inflation going forward.
On the flip side, oil faces a mixed outlook at this stage. A full-blown trade war between the US, EU and China would unquestionably damage global growth rates, thus reducing the already subdued demand for oil. However, should Trump harden his stance on tariffs, and the Ukraine-Russia conflict ends by Easter, as Trump aims for, then bearish pressure could intensify.
Investors need to understand why Donald Trump keeps threatening, and imposing, tariffs, says Morgan Stanley’s Michael Zezas.
Zezas tells clients:
Simply put, tariffs are bargaining chips, not a policy goal. The current administration is using them to achieve the objectives of its “America First Trade Policy”: to reduce the trade deficit in goods, and to protect national security and global economic advantage by nurturing key technologies and securing sensitive supply chains.
Voters and elected officials may debate whether tariffs are the right tool, and some may even argue that these aren’t the right goals. But opinion surveys and bipartisan policy actions suggest that support for these objectives is indeed the consensus and has been for some time.
Hence, it’s not surprising that the Trump administration is actively exploring, developing, and deploying tariff authorities across a range of geographies and products to achieve these ends.
Here’s the moment tariff fears pushed gold up to a new round-number high:
New all-time high for Gold pic.twitter.com/lSu21B7wdx
— Peter Harris | GldSpy (@GldSpy) February 10, 2025
Updated
Gold hits $2,900 per ounce - next stop $3,000?
The gold price is continuing to hit new peaks this morning, as trade war fears fuel a dash for safe assets.
Gold has now hit a new all-time high of $2,900 per ounce, extending its earlier gains – and leading to speculation that it could soon hit the $3k level.
Gold after Trump imposes 25% Tariffs on US Steel and Aluminium Imports. Already going towards $3,000 pic.twitter.com/kxVMq3pO5h
— Yasir Mahmood (@MofaYasir) February 10, 2025
ING’s commodity strategist, Ewa Manthey, suggests the $3,000 level is now in sight, as concerns that tariffs will lead to higher inflation and slower economic growth are spurring demand for safe haven assets.
Manthey wrote last week:
US President Donald Trump’s latest comments suggesting that the US takes over the Gaza strip and assumes responsibility for reconstructing the territory have added to this uncertainty, further boosting gold prices.
With Trump back in the White House, uncertainty and unpredictability are running high. And gold will continue to benefit from this environment.
Gold is already up more than 9% year-to-date, having hit a series of consecutive record highs along the way. Here's why we think gold at $3,000/oz is within reach.https://t.co/O8cYwpHRwc pic.twitter.com/4EleREW8H4
— ING Economics (@ING_Economics) February 10, 2025
Updated
The US dollar index, which tracks the greenback against a basket of currencies, has risen by 0.23% today.
It’s hit a record high against India’s rupee, for example, which fell to almost 88 rupee to the dollar.
The pound is a little weaker against the dollar too, at $1.2395.
In the markets, it's turning into "a febrile February"
Markets are at the mercy of what is turning into “a febrile February”, says. Richard Hunter, head of markets at interactive investor.
Another raft of announcements are keeping volatility high on the agenda, Hunter explains:
Tariffs remain central to the uncertainty, with President Trump’s latest announcement on Sunday likely to keep investors on edge this week. He has threatened reciprocal tariffs across the board to equal the rates being charged to the US, quite apart from a 25% levy on the import of steel and aluminium.
Sentiment was already wavering at the end of the week with a survey which showed that consumer sentiment had fallen to 67.8 in February against estimates of 71.3 and perhaps even more concerningly that inflation expectations had risen to 4.3%. The jump in the anticipated rate of inflation was a potential canary in the coal mine in quantifying the effects of tariffs, while also vindicates the decision of the Federal Reserve to hold fire on interest rate cuts for the time being.
Australia’s stock market lost ground today as investors reacted to Donald Trump’s plan to bring in new tariffs on steel and aluminium.
The S&P/ASX index of Australia’s largest companies dipped by 0.3%, pulled down by mining companies such as BHP Group (-1%) and Rio Tinto (-1.2%).
They fell as the iron ore price was hit by Trump’s announcement – although the iron ore price has since recovered…..
UK must ‘wait and see’ if Trump provides clarity on steel tariff threat
Home Office minister Dame Angela Eagle said the UK will have to “wait and see” if Donald Trump provides more clarity on his threat to impose tariffs on all steel and aluminium imports to the US.
Speaking this morning, Eagle said the UK government must “wait and see whether the president gets more specific about what he meant by that comment”, PA Media reports.
Eagle added:
“We have a very balanced trading relationship with the US – I think £300 billion worth of trade between our countries – and I think it’s in the best interests of both of us, as longstanding allies and neighbours, that we carry on with that balanced trade.”
European markets open a little higher
European stock markets have opened fairly calmly, despite the latest tariff threat lobbed by Donald Trump from Air Force One yesterday.
In London, the FTSE 100 share index has risen by 0.2% or 16 points to 8716 points.
The FTSE 100 is being lifted by oil giant BP, whose shares have jumped by 5.5% on the news that activist investor Elliott has taken a stake.
France’s CAC and Germanys DAX indices are both up 0.2%.
Updated
Trump: There could be a problem with Treasuries
Donald Trump has also jolted investors by suggesting that there may be “a problem” with US government debt.
Trump told reporters on Air Force One that administration officials who have been combing through payment records in an effort to identify wasteful spending have found some irregularities while examining data at the US Treasury Department.
Trump declared:
There could be a problem - you’ve been reading about that, with Treasuries and that could be an interesting problem.”
“It could be that a lot of those things don’t count. In other words, that some of that stuff that we’re finding is very fraudulent, therefore maybe we have less debt than we thought.”
It isn’t clear whether Trump was talking about US government debt, or payments processed through the Treasury Department.
New: Trump, riffing about DOGE, suggested today he believes there’s fraud in U.S. *treasuries* and quipped that the debt might be lower than thought.
— Josh Wingrove (@josh_wingrove) February 10, 2025
It wasn’t immediately clear what he meant or if he is serious about challenging certain debt obligations. pic.twitter.com/RPDgq8TBMj
US government debt is a bedrock of the global financial system, as Treasury bills (US bonds) are seen as a “risk-free” asset, from which the price of other assets are set.
So any suggestion that US debt obligations might not be iron-clad might be problematic…
Updated
American economist Brad Setser, Senior Fellow on the Council on Foreign Relations, has written an informative thread on X about Donald Trump’s latest tariffs.
He predicts that new tariffs on aluminium will lead to short-term pain for no short-term gain….
A bit of background on steel and aluminum imports ahead of the expected announcement of 25% tariffs (and the cancellation of existing exemptions/ exclusions?) tomorrow --
— Brad Setser (@Brad_Setser) February 10, 2025
US steel imports are ~ 25m tons, and stable
1/ pic.twitter.com/4lcSco7uN8
Domestic production is ~ 85m tons, so the US is a net importer -- and while there is a 25% tariff now in place, most imports now come in under various exemptions/ exclusions and deals (tariff rate quotas that allow some steel in tariff free)
— Brad Setser (@Brad_Setser) February 10, 2025
2/
Mexico and Canada are just 10 mts of imports, and those imports come in under a deal negotiated during the first Trump Administration (as do the 4 m tons from Brazil). Biden era deals cover the EU, UK and Japan ...
— Brad Setser (@Brad_Setser) February 10, 2025
3/ pic.twitter.com/PUZFSWnLtO
US steel prices are higher than global steel prices (the tariffs still have an impact, despite the exemptions/ tariff rate quotas), and US production hasn't responded to the price differential
— Brad Setser (@Brad_Setser) February 10, 2025
4/https://t.co/5WYhiOa5Xl
As the first chart makes clear, imports have been flat recently so Trump isn't responding to any surge in imports or crisis in the industry (personally am disappointed that the steel industry didn't deliver on a production increase after it became clear that Biden wasn't going to…
— Brad Setser (@Brad_Setser) February 10, 2025
The original 232 tariffs on aluminum were 10% -- so going up to 25% is significant, all the more so because imports from Canada in particular are essential for the primary aluminum market in the US to clear (chart in USD billion)
— Brad Setser (@Brad_Setser) February 10, 2025
6/ pic.twitter.com/MGE9lUdv3M
So expect some push back from downstream users of aluminum, as this move increases their short-term costs and any increase in US primary production requires restarting smelters which takes time and may take more than a 25% tariff --
— Brad Setser (@Brad_Setser) February 10, 2025
7/
So in aluminum this is short-term pain for no short-term gain -- which is why the original 232 tariffs were set at 10% ... and this is also a measure that very directly impacts Canada (a big supplier of green aluminum by the way, but Trump doesn't care about that ... )
— Brad Setser (@Brad_Setser) February 10, 2025
8/8
News about tariffs will clearly continue to dominate the agenda all week, predicts Deutsche Bank strategist Jim Reid.
He told clients:
Mr Trump announced on Friday that he’d be holding a press conference early this week on the US plans for equalising tariffs on “reciprocal trade” with an added mention for autos.
Then on Air Force One last night Mr Trump said he would put 25% tariffs on steel and aluminium imports later today. Canada, Mexico and Latin America would be the most impacted given that’s where the US imports most of these goods from.
Gold hits record high after latest Trump tariff move
The gold price has hit a record high, as investors scramble for a safe haven for their money after the US president said he will announce new 25% tariffs on all steel and aluminum imports.
The spot price of gold has risen by 1% in early trading to $2,892 per ounce, above the previous record high set last Friday.
Gold has been rising in recent weeks, amid concerns over the impact of Donald Trump’s policies. It has gained 10% since the start of the year, having ended 2024 at $2,623 per ounce.
⚠️BREAKING:
— Investing.com (@Investingcom) February 10, 2025
*GOLD PRICES HIT RECORD HIGH ABOVE $2,900 AS TRUMP TARIFFS FUEL HAVEN DEMAND$GC_F pic.twitter.com/CpYRKyiZgl
This move comes as tariff threats dominate the markets again, says Kathleen Brooks, research director at XTB,
Brooks believes Trump’s plan for new levies on steel and aluminium could push gold higher:
Interestingly, Trump announced his latest tariffs late on Sunday, which suggests that he is not too worried about the market reaction. Typically, Trump has announced tariffs earlier in the weekend, as if he was watching the reaction and to give himself time to back track before stocks or risk assets sold off too sharply. This may suggest that Trump is determined to impose tariffs on these industrial metals.
These tariffs are targeting specific products, rather than individual countries, which makes it hard for any negotiations to take place. We think that this move could boost the gold price, as it may lead to a further flurry of demand to bring gold on shore to the US, in case Trump imposes tariffs on precious metals.
The question for investors is whether gold will reach the psychologically significant $3,000 level on the back of ever-growing tariff levies. So far, the gold price is higher by $25 early on Monday.
Updated
Aluminium prices are rising, as traders worry about the imposition of new 25% tariffs on imports into the US.
The three-month aluminium contract on the London Metal Exchange (LME) has risen 0.3% to $2,635 (£2,122) a metric ton.
The aluminium contract on the Shanghai Futures Exchange was 0.2% higher at 20,530 yuan (£2,264) a ton.
The market may worry that new trade barriers leads to supply problems, or hits economic growth – meaning less demand for metal.
Kyle Rodda, senior financial markets analyst at Capital.com, explains:
“At the moment we are seeing signs that maybe this could put some upward pressure in the short term on prices just because of the supply element.
“One of the impacts of these tariffs is depressed global economic activity.”
Australia working on exemption from US steel and aluminum tariffs
The Australian government is hoping to make the case for an exemption from U.S. tariffs on steel and aluminum imports.
Anthony Albanese has said he will make the case for “free and fair trade” with America in an upcoming call with the US president, after Donald Trump announced. he would impose tariffs on all steel and aluminium imports into the US.
The Albanese government has been bracing for Trump for announce new tariffs, with senior ministers and officials working behind the scenes for some time to secure tariff exemptions on Australian exports as were achieved during Trump’s first term in office.
The trade minister, Don Farrell, and his colleagues had been seeking to make Australia’s case to avoid such tariffs, with representations made at high levels for exemptions. The defence minister, Richard Marles, was in the US over the weekend meeting with senior Trump officials.
French foreign minister Barrot: We will respond....
France’s foreign minister has pledged to react to Donald Trump’s latest tariff announcements, saying Paris will call on the European Union to respond.
Jean-Noel Barrot told TF1 television that France and its European partners should not hesitate to defend their interests in the face of the US tariff threats.
South Korea holds emergency meeting on steel tariffs
South Korea’s industry ministry says it has held an emergency meeting with steelmakers in Seoul to discuss measures to minimise the impact of potential US tariffs, Reuters reports.
The ministry said it was trying to learn the details of the potential tariffs, after Donald Trump said he would announce new 25% tariffs on all steel and aluminum imports into the U.S.
The ministry also said it would work closely with steelmakers to actively respond to the potential tariffs.
Korean steelmakers supply steel to the factories of car makers Hyundai Motor, Kia Motors as well as television and home appliance companies like Samsung Electronics and LG Electronics in Mexico and the United States, industry officials said.
Opening summary
Hello and welcome to our live coverage of the world’s response to Donald Trump’s announcement that he will soon impose new 25% tariffs on all steel and aluminium imports into the US.
Trump, speaking to reporters on Air Force One on his way to the NFL Super Bowl in New Orleans on Sunday, said he would announce the new metals tariffs on Monday.
He also said he would announce reciprocal tariffs on Tuesday or Wednesday, to take effect almost immediately, applying them to all countries and matching the tariff rates levied by each country.
“And very simply, it’s, if they charge us, we charge them,” Trump said of the reciprocal tariff plan.
The largest sources of US steel imports are Canada, Brazil and Mexico, followed by South Korea and Vietnam, according to government and American Iron and Steel Institute data.
Vasu Menon, managing director of investment strategy at OCBC in Singapore said it was unclear whether Trump’s latest announcement was a negotiation strategy.
“After all if implemented it will also hurt the U.S. given its dependence on imported steel and aluminum from Canada and Mexico which are major suppliers of these metals to the US,” Menon said.
“Markets will be on edge and volatile with the escalating trade war and investors need to tread with caution for now and brace for possibly more market turbulence.”
Trump’s comments came as China’s retaliatory tariffs, announced last week, came into effect. The measures target $14bn worth of products with a 15% tariff on coal and LNG, and 10% on crude oil, farm equipment and some vehicles.
The agenda
All day: France will host the Artificial Intelligence (AI) Action Summit, gathering at the Grand Palais
9.30am ONS stats on UK public service productivity
2pm: Christine Lagarde speaking in European Parliament plenary debate on ECB Annual Report 2023
