Speaking on television last week, Trump's Commerce Secretary Wilbur Ross made an unusual statement about the White House tariff plans, specifically about carve-outs for Mexico and Canada. Ross called the administration's definition of national security something new and unusual itself. "It's not the conventional definition of national security," Ross said.
It's clear from Trump's post-tax-cut shift to correcting imbalances in global trade — something Trump has cared about for a lot longer and with a lot more passion than tax policy — that an evolving definition of national security is a geopolitical and stock market risk.
Panic, on either front, would be an overstatement. The real threat from the new metals tariffs is that a broader, global trade war would have unintended and unpredictable consequences. And in the stock market context, a national security-defined trade war could be more significant — and harder to account for — in the market's best and most widely invested sector: technology. The damage could be much bigger than the "rounding error" within Apple earnings from the steel and aluminum trade penalties.
Those fears came into much starker relief on Tuesday when reports surfaced that Trump wanted $60 billion in trade penalties directed at the Chinese, and a day after Trump killed a huge cross-border technology sector acquisition based on national security concerns. CNBC reported late on Tuesday that Trump is considering indefinite tariffs and investment restrictions targeting the Chinese tech and telecom sectors.
"With potential trade wars with China front and center, and tariffs looking like the Fort Sumter that could set off a battle royale with tech space getting caught up in the crosshairs, we believe the moving definition of national security interests has gone from background noise to a more relevant issue for tech investors," said Daniel Ives, chief strategy officer and head of technology research at GBH Insights, and the analyst who said this week that the steel and metal tariffs specifically were an Apple earnings' rounding error.
"China has some fighting words, and Silicon Valley and the Street are starting to get nervous with Trump igniting the match," Ives said.