logo

Why there are no real winners in a trade war

VIDEO1:2301:23
Why Wall Street is on edge over Trump's steel and aluminum tariffs

One major theme I'm watching is the implementation of the newly announced steel and aluminum tariffs, and more importantly what retaliatory measures we may see from U.S. trade partners.

President Donald Trump has gradually initiated trade tariffs on a variety of imported goods, the latest of which is a tariff on steel and aluminum imports. Let's not forget that he's already instituted tariffs on imported solar panels, washing machines and Canadian lumber.

In general, trade tariffs are not positive for economic growth, and a potential ensuing trade war ultimately produces no winners. Tariffs tend to raise prices for consumers, raise costs for businesses using the imported materials in manufacturing and marginally detract from economic growth.

Some industries hit harder than others

The tariffs so far should have a limited impact on the economy, but certain industries like beer brewers, homebuilders, oil and gas drillers and canned goods manufacturers will feel the heat more so than others.

The broader fear, of course, lies in the potential for a global trade war erupting as an outcome of these tariffs, causing our trading partners to place tariffs on our exports to them.

Domestic industries like agriculture, bourbon, Harley Davidson motorcycles and tobacco products would be among those hit by such an event.

At the end of the day, nobody really emerges as the winner of a trade war, and we'll be closely monitoring the news flow on this as Wall Street and investors are certainly on edge over this.