President Trump’s trade war threat is rattling Wall Street.
The Dow is set to open around 175 points lower Friday after losing 420 points Thursday. The S&P 500 was on track to start 0.8% lower.
On Friday, Trump escalated concerns about a full-blown trade fight by tweeting “trade wars are good, and easy to win.”
Trump’s steel and aluminum tariff announcement Thursday caught investors off guard and raised fears about a tit-for-tat retaliation from China and other major US trading partners.
Trump said his administration would impose a 25% tariff on steel imports and a 10% tariff on aluminum. It was not immediately clear whether some countries would be excluded from the tariffs.
Top American trading partners, including Canada, the European Union and Australia all slammed the decision Thursday.
Investors are also worried about rising prices hurting the economy.
Costs could soar for American companies that rely heavily on aluminum and steel produced overseas, such as auto and plane manufacturers. Imports make up about a third of the steel American businesses use every year, and more than 90% of aluminum used here.
Shares of Boeing and General Motors pointed to a 1% drop Friday. Ford was set to open 0.5% lower. All three fell on Thursday.
If the tariffs bring higher steel and aluminum, companies that rely on those products may pass off some of those costs to consumers. That raises the possibility inflation will creep up.
At least two corners of the stock market cheered Trump’s tariff announcement. U.S. Steel and AK Steel are set to open slightly lower Friday after soaring 6% and 10%, respectively, on Thursday.
Century Aluminum is also pointing to a higher start Friday after spiking 7% Thursday. Another major aluminum maker, Alcoa, is set to open ahead for the second day in a row.