Trump’s New Tariff Threat on Steel and Aluminum

U.S. President Donald Trump has once again threatened to double tariffs—this time on steel and aluminum—raising them to 50%. But unlike previous rounds of trade drama, markets barely blinked. Investors seem to be treating it as another bluff rather than a major shift in trade policy.

Why the Steel Tariff Threat Didn't Shake Markets

Trump’s announcement came late Friday, just after markets closed. Historically, such surprise moves would send shockwaves through global markets. But on Monday morning, things were quiet. The Canadian dollar—which might have been expected to fall, given Canada’s heavy steel exports to the U.S.—was actually stronger. Wall Street futures dipped only slightly. European stock futures barely moved.

This calm response may be due to what traders call the TACO effect—short for “Trump Always Chickens Out.”

It’s become a meme among investors who’ve seen threats like this before, only for Trump to back down or delay enforcement at the last minute. The deadline for the new tariffs is Wednesday, but markets aren’t buying it—at least not yet.

EU and China Push Back

Europe wasn’t thrilled. EU officials said they’re ready to retaliate if the new tariffs go ahead. They also pointed to a recent court decision against the April 2 tariffs, saying it gives them more “leverage.” Still, no immediate market panic followed that warning either.

China, for its part, is staying quiet. Trump took another rhetorical swipe at Beijing, accusing China of withholding vital goods. But China hasn’t budged. If Trump is waiting for a call from President Xi Jinping to smooth things over, he could be in for a long wait.

Fed Voices Caution on Tariffs and the Economy

Even the Federal Reserve is weighing in. Fed Governor Christopher Waller, speaking in South Korea, warned that tariffs could hurt economic activity and increase inflation. That’s not a small concern as markets are still holding out hope for interest rate cuts later this year. Waller, one of the more dovish voices at the Fed, said he still sees the possibility of rate cuts, but his comments suggest tariffs could jeopardize that prospect.

Fed Chair Jerome Powell is expected to speak later today, though only in an opening remark at an international finance event. Other Fed officials will join Q&A sessions, where more insight into rate policy might emerge.

What Investors Should Watch Next

Markets may be quiet now, but that could change fast. Key data coming Monday includes:

• UK house prices
• European PMI numbers
• U.S. ISM manufacturing survey

All of this could impact the overall economic picture, especially if signs of weakness emerge. If Trump does go through with the tariff hike this Wednesday, expect a sharper reaction—especially if the EU or China respond with force.

Bottom Line for Tariff Threat on Steel and Aluminum

Investors aren’t panicking yet over Trump’s latest tariff threats. Many believe it’s political posturing, not policy. But if words turn into action—and retaliation follows—markets may not stay calm for long.