May 31, 2018 3:33 pm
Updated: May 31, 2018 3:38 pm

U.S. stocks fall after Trump administration announces steel, aluminum tariffs

In this photo taken Feb. 12, 2015, cut panels of steel used to make blades to build fans for industrial ventilation systems are stored on the production floor in Harmony, Pa. President Donald Trump pledged during the campaign to help U.S. factory workers by slapping tariffs on foreign steel, but his long-awaited decision on the issue is running behind schedule.

(AP Photo/Keith Srakocic)

NEW YORK – U.S. stocks are falling Thursday after the Trump administration announced that it will impose tariffs on steel and aluminum imported from Europe, Canada and Mexico.

That’s helping U.S. steel and aluminum companies, but hurting big machinery makers like Boeing and Caterpillar. Mexico and Canada announced tariffs on some U.S. goods in response.

READ MORE: What U.S. steel, aluminum tariffs mean for Canadians — and their wallets

The European Union has said it could put duties on products including peanut butter and orange juice, and household goods makers are suffering losses.

General Motors is surging after SoftBank of Japan said it will invest $2.25 billion in GM’s autonomous car business.

WATCH: Canada to impose ‘dollar-for-dollar’ retaliatory tariffs on the U.S.

Story continues below

KEEPING SCORE: The S&P 500 index lost 20 points, or 0.7 per cent, to 2,703 as of 2 p.m. Eastern time. The Dow Jones industrial average fell 283 points, or 1.2 per cent, to 24,384.

The Nasdaq composite dipped 23 points, or 0.3 per cent, to 7,439 as technology companies like Alphabet and Facebook bucked the market’s decline. The Russell 2000 index, which is made up of smaller companies that tend to do more business in the U.S., slipped 14 points, or 0.9 per cent, to 1,633. It closed at a record high Wednesday.

READ MORE: Canada retaliates against U.S. steel, aluminum tariffs, announces dollar-for-dollar ‘countermeasures’

STEEL OR NO STEEL: U.S. Steel jumped 2.8 per cent to $37.26 and Century Aluminum gained 3.3 per cent to $17.72 after the Trump administration announced its tariff plans. However Canada’s announcement of reciprocal tariffs on steel and aluminum from the U.S. put some pressure on the stocks.

Canada said it will put tariffs on aluminum and steel from the U.S. Boeing dropped 1.4 per cent to $353.25 and Caterpillar fell 2 per cent to $152.32. Farm equipment maker Deere fell 2.9 per cent to $150.55. The tariffs could increase the cost of the metals they use to make their products, and tariffs in Europe or other markets could hurt their sales.

WATCH: Wilbur Ross on steel tariffs: Countries ‘will get over this in due course’

THE RESPONSE: Mexico said it would penalize U.S. imports including pork bellies, cheeses and flat steel, and reports said sausages will also be subject to tariffs. Dairy maker Dean Foods fell 5 per cent to $9.50 and Tyson Foods, which makes products including Jimmy Dean sausages, skidded 3.8 per cent to $67.57.

The EU hasn’t officially announced new tariffs, but it has prepared a list of targeted products including orange juice, peanut butter, steel, motorcycles and Kentucky bourbon. Harley-Davidson fell 2.1 per cent to $41.10. Hormel, which makes Skippy peanut butter, skidded 3.5 per cent to $35.86 and Tropicana maker PepsiCo shed 1.1 per cent to $99.80.

THE QUOTE: Investors and businesses have been waiting for months as the U.S. negotiated with its trading partners over the tariffs. That process still hasn’t ended, but David Kelly of JPMorgan Funds said it’s discouraging businesses from investing because they don’t want to build up a product only to see it targeted for tariffs.

“You can do great harm to an economy just by leaving people up in the air about what the final deal is going to be,” said Kelly, the chief global strategist of JPMorgan Funds. He said the uncertainty is undoing some of the effects of the recent corporate tax cut.

WATCH: EU head: US tariffs on steel, aluminium imports totally unacceptable

GM GET MONEY: GM said SoftBank is taking a 20 per cent stake in the GM Cruise automated division, which values that business at about $11 billion. GM itself will invest another $1.1 billion in it to speed up large-scale deployment of self-driving robotaxis next year. General Motors stock jumped 10.6 per cent to $41.85 and it’s on track for its biggest gain since it emerged from bankruptcy and went public again in 2010.

WEATHER WOES: Discount retailers Dollar Tree and Dollar General both stumbled after they said inclement weather hurt their business in the first quarter of the year. Their results fell short of Wall Street projections and Dollar Tree cut its profit forecast for the year.

Dollar Tree fell 13.2 per cent to $83.63 and Dollar General gave up 9 per cent to $87.84.

READ MORE: From pork to jeans — countries threaten tariff retaliation for U.S. steel, aluminum duties

DEUTSCHE BANK: Deutsche Bank skidded after the Wall Street Journal reported that the Federal Reserve determined the bank’s U.S. business is in “troubled condition,” a designation that pushed the bank to take fewer risks and requires it to get Fed approval before it hires or fires senior managers in the U.S. The stock lost 6.4 per cent to $10.83.

ENERGY: U.S. crude oil slipped 2.1 per cent to $66.78 a barrel in New York. Brent crude, used to price international oils, lost 0.5 per cent to $77.31 per barrel in London.

BONDS: Bond prices edged higher. The yield on the 10-year Treasury note fell to 2.83 per cent from 2.85 per cent and financial companies fell.

WATCH: Trudeau calls new tariffs ‘an affront’ to the Canada/US relationship

METALS: Gold lost 0.1 per cent to $1,300.10 an ounce. Silver fell 0.5 per cent to $16.46 an ounce. Copper stayed at $3.07 a pound.

CURRENCIES: The dollar fell to 108.83 yen from 108.85 yen. The euro rose to $1.1679 from $1.1654.

OVERSEAS: The DAX in Germany lost 1.4 per cent and France’s CAC 40 fell 0.5 per cent. The British FTSE 100 index dipped 0.1 per cent. In Spain, the IBEX 35 slumped 1.1 per cent as it appeared conservative Prime Minister Mariano Rajoy would lose a vote of no confidence and be removed after almost eight years in power. The centre-left Socialist party was positioned to take power.

Asian stocks rose following big gains in the U.S. the day before. Japan’s Nikkei 225 index gained 0.8 per cent and Hong Kong’s Hang Seng index jumped 1.4 per cent. South Korea’s Kospi advanced 0.6 per cent.

© 2018 The Canadian Press

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