Tariff Turbulence

On March 1, 2018, President Trump announced that the United States would be imposing a 25% tariff on steel imports and a 10% tariff on aluminum imports. The S&P 500 Index fell 2% on the news before rallying over the last two hours of trading to finish the day down 1.3%. Uncertainty extended into Friday, with the S&P 500 down over 1% early, then rallying over the remainder of the trading day to finish with a gain of over 0.5%. In this week’s commentary, we look at the potential economic impact of the announced tariffs, evaluate the equity market’s response, and, while not our base case, look at what it would take for equity market turbulence to turn into a full-blown tantrum.

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