Steel suddenly looks sturdier, but orange juice could be spoiled.
President Trump’s imposition of tariffs on imported steel and aluminum is expected to ripple through economy as foreign trading partners are likely to retaliate against American goods.
Commerce Secretary Wilbur Ross said that Canada, Mexico and the European Union would be subject to a 25% tariff on steel and a 10% tariff on aluminum beginning at midnight Thursday.
The trade spat is expected to affect the prices paid by consumers and companies for everything ranging from new cars to certain alcoholic drinks.
For example, European retaliation against the U.S. is expected to target goods representing $4.4 billion in annual sales, according to Panjiva S&P Global Market Intelligence.
Products that could be affected range widely, according to a list released in March: orange juice, yachts, kidney beans, cranberries, cigarettes, shorts, garden umbrellas, porcelain ceramic, upholstered seats and playing cards.
Trump’s decision to move forward with the tariffs caused a negative reaction in the stock market, where investors pushed the Dow Jones industrial average down more than 250 points amid fears that the president could be starting a feared trade war.
Tariffs are viewed negatively by investors because they could crimp profits of companies that use steel and aluminum to make goods, and cause prices on consumer products that use these metals to rise.
While shares of U.S. Steel rose 1.7%, 29 of the 30 Dow stocks closed lower. The biggest downdrafts were in stocks like aerospace giant Boeing, down 1.7%, and heavy-equipment maker Caterpillar, off 2.3%, which do a lot of business abroad and would be most negatively impacted by higher costs and less trade.
Shares in Mexico and Canada were also lower, with the iShares MSCI Mexico ETF down 1.1%, and the iShares Canada ETF 0.5% lower. The Stoxx Europe 600 index, a broad gauge of European stocks, fell 0.6%.
While the precise effect on prices and sales remains uncertain, major winners and losers are becoming clearer:
Winners
American steel: The 25% tariff on steel has bolstered the economic case for using locally made steel. Moody’s Investors Service on Thursday raised its outlook for the U.S. steel industry from stable to positive, in part due to the tariff decision.
“Imports remained high through April in advance of tariff implementation, but should subside once the tariff goes into effect,” Moody’s said.
American aluminum: The Alliance for American Manufacturing said domestic aluminum is already benefiting from the Trump plan.
It “means more jobs and added capacity,” the Alliance said.
Companies like U.S.-based Century Aluminum may be poised to capitalize. Its stock closed 3.3% higher.
Foreign companies that serve foreign markets in the affected areas: Any foreign company that competes with American manufacturers in international markets may benefit. Why? Their business would get a boost if it is targeted primarily at European customers or other countries that retaliate against the U.S.
Losers
Whiskey: American companies shipped $737 million in bourbon whiskey to European customers in the 12 months ended March 31, according to Panjiva S&P.
Immediately following Trump’s announcement in March, the Kentucky Distillers’ Association said that threatened European tariffs would “harm consumers through higher prices and more limited product availability, and significantly threaten the distilling renaissance.”
“We remain hopeful that continued negotiations will avoid a costly trade war and protect our allies and partnerships around the world, which will continue to benefit spirits producers and consumers for years to come,” Eric Gregory, president of the Kentucky Distillers’ Association, said Thursday.
Motorcycles: Milwaukee-based Harley-Davidson could feel the pinch in both the rising costs of steel and aluminum, and in higher prices of its motorcycles sold outside the U.S.
“We support free and fair trade and hope for a quick resolution to this issue,” Harley said Thursday. “We believe import tariffs on steel and aluminum will drive up costs for all products made with these raw materials, regardless of their origin.”
Drinks made with aluminum cans: The steel and aluminum tariffs could raise prices for beer, for example, and other products that use metal as containers.
“Over the long run, these tariffs will drive aluminum prices higher globally, increasing the cost of beer production for all brewers,” said Jim McGreevy, president of the Beer Institute, in a statement.
Makeup companies: The Personal Care Products Council, which represents global cosmetic companies, has expressed opposition to escalated tariffs.
Eye makeup is particularly at risk, according to Panjiva S&P. U.S. exports of eye make-up to Europe totaled $236 million in the 12 months ended in March.