On Friday, U.S. tariffs on $34 billion worth of Chinese goods officially kicked in. China responded with tariffs of its own on U.S. products.

What’s a trade war?

A trade war is when one country puts tariffs, or taxes, on another’s imports. The other country then responds with tariffs of its own.

What’s a tariff?

A tariff, sometimes called a duty, is a tax typically imposed by one nation on another’s imports. (In some cases, tariffs can be levied on exports.) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.

The U.S. has put taxes on products many U.S. manufacturers import as part of their supply chains, such as auto and jet engine parts, as well as compressors and electrical components. China, in turn, is reportedly putting taxes on soybeans, aircraft, and cars.

How a trade war could affect you

There are concerns that a trade war will increase costs to buy goods for U.S. consumers. There are also worries that tariffs could cost workers their jobs in various manufacturing industries, as expenses increase.

For example, on the import side, numerous industries depend on cheap steel, which they get from China and other markets, to manufacture products. Tariffs are likely to increase the cost of steel at home, and those increases are likely to be passed along to the consumer in the form of higher prices.

On the export side, China is placing tariffs on our agricultural products and beef, which will make these products more expensive to sell in China. U.S. soybean farmers are one group who are likely to get hit by tariffs from China. (In related news, U.S. exporters of cheese say they’re feeling the pinch from a parallel trade war running with Mexico.)

Why is this happening?

President Trump ran on an “America First” platform, which aims to advance the interests of U.S. manufacturers, in part by withdrawing from trade treaties and prior trade agreements.

In recent months, the U.S. has put tariffs on foreign steel and aluminum, not only from China but also Canada and Mexico. It has also taxed solar panels and washing machines, primarily from Asia.

The Trump administration is planning another round of tariffs on an additional $216 billion worth of Chinese products later this summer and into the fall, according to reports.

The post Trump’s Trade War With China Begins appeared first on Stash Learn.

A handful of headlines drove the Dow Jones down by as much as 500 points. The apparent cause? Banks, tariffs, and political woes in Italy.

So what does this all have to do with your portfolio?

Let’s start with the news first.

Bank losses

JP Morgan and Morgan Stanley both saw their share values fall on Tuesday, dragging many other stocks down with them.

Morgan Stanley shares fell by more than 6% after an executive said that the company’s wealth management division was looking at challenging business conditions in the second quarter. The comments spooked investors enough to send the share prices spiraling for its worst day in two years.

JP Morgan’s shares also fell after remarks from an executive, as the company’s co-president Daniel Pinto said that trading revenues were expected to be flat in the second quarter.

Other banks had a bad day as well. Goldman Sachs, Citigroup, and Bank of America shares all fell by more than 3%.

(More) Chinese tariffs and North Korea

While the on-again, off-again White House summit with North Korea appears to be on again, the biggest ripples coming out of Washington D.C. had to do with additional tariffs levied on China.

The White House announced that it will release a list of $50 billion in Chinese goods in June that will be subject to a 25% tariff. The Trump administration also said it would be implementing investment and export restrictions in an attempt to curb theft of intellectual property theft from U.S. companies.

The announcement follows previous rounds of tug-of-war with China regarding trade, which also caused the markets to tank.

Italy: The next Greece?

The Italian economy continues to struggle a decade after the Great Recession, and the country’s still wracked with debt. Fears are that Italy could enter a deep recession, much like what happened to Greece.

What has the markets even more on-edge is the fact that Italy’s economy is ten times bigger than Greece’s, and Italy’s turbulent political environment that hasn’t produced a plan to right the ship.

Italy is the third-largest economy in the European Union, and its economic troubles could create a backlash affecting the entire eurozone and markets around the world.

Other fears: Will Italy exit the EU? Analysts worry about another Brexit situation and its effect on the global economy.

What should you do?

Take your finger off the “sell” button. It’s easy to start panicking when the numbers seem to be going the wrong way.

When you sell, you’re effectively locking in any gain or loss you’ve made. Stay strong, don’t let your jitters get the best of you.

Take a deep breath and take the long view. On average, if you look at the last 100 years, markets have grown a little over 8% a year. Going forward, many experts predict a long-term expected annual return for US large cap stocks (i.e., the S&P 500) of 5.9%.”

Here’s the hard truth: There are years where the market is strong and some years where the market struggles. You can’t sweat day to day market ups and downs when you’re investing for a lifetime.

We have a saying at Stash. It’s all about “time in the market, not trying to time the market.”

Stay strong. Stay the course. Stay diversified. It’s the Stash Way.

The post Why Did the Market Drop 500 Points? appeared first on Stash Learn.

The trade deficit is one one of the rationales offered by the Trump administration for possibly imposing stiff tariffs on a wide array of Chinese exports.

What is the trade deficit?

In simplest terms, a trade deficit, sometimes referred to as a trade gap or an account deficit, is when a country imports more than it exports, which can lead to all kinds of economic issues.

But what does the trade have to do with billions of dollars worth of potential tariffs on Chinese goods, such as steel and aluminum?

We’ll break it down for you.

Let’s talk trade

We live in a global economy. Nations import and export their goods, to and from each other all the time. In fact the global economy for exports is worth a staggering $16 trillion, according to the World Trade Organization.

All countries have what’s called a trade balance–that’s the sum of what it imports and what it exports. If a country imports more than it exports, it has a negative trade balance, or deficit. If it exports more than it imports, it has a positive trade balance, or surplus.

Why do countries trade?

Think of it this way: Companies in a particular country produce goods they want to sell. There’s a domestic market for sales, but there are also foreign markets–other countries might want to buy what another country produces. And that’s particularly the case if that country doesn’t manufacture or grow those things itself.

The U.S., with its rich farmland in the Midwest and elsewhere, is one of the largest exporters of wheat, for example. And although the situation has changed dramatically in recent years,  the U.S. used to import much of its petroleum from the oil-rich Middle East, when it seemed like our own supplies were limited.

Getting it cheaper from someplace else

But it’s not always the case that a country imports a particular good because it doesn’t have it, or produce it domestically. Sometimes wealthy countries such as the U.S. purchase exports simply because the goods may be cheaper than what they can produce themselves.

For decades that’s been the case with the U.S. and China, and other Asian countries, where the price to produce common items from clothing to electronics is often much less expensive than the cost to produce the same items domestically.

In fact, China’s access to cheap labor and sophisticated manufacturing has made it the biggest exporter in the world.

Cheap products are great for U.S. consumers who benefit from the reduced prices. On the other hand they may not be so good for U.S. workers, if the jobs producing those items are all based overseas.

This is the theory of the Trump administration, which has said our trade deficit is killing jobs at home.

Surplus vs deficit

If a country imports more than it exports, that country runs what’s called a trade or account deficit. That’s in contrast to an account surplus, if a country exports more than it imports.

Simply put, a surplus is more appealing than a deficit, because it puts a country’s economy in a stronger position.

Here’s why: It actually costs us money to import more than we export. In order to buy all those goods from overseas, U.S. companies exchange dollars for the local currency of the country manufacturing what we buy.

Here’s where it gets a bit complicated.

That means U.S. dollars accumulate in central banks overseas, which typically use those dollars to purchase our Treasury debt, since it pays interest.

But Treasuries are a form of debt. So those export dollars wind up as loans to the U.S. government, essentially increasing national debt.

What does this have to do with the U.S. and China?

Currently, the U.S. exports about $2.2 trillion of goods and services annually, and imports about $2.7 trillion, according to International Trade Administration. That means we have a trade deficit of roughly $500 billion annually.

Most of that gap, or $375 billion, is with one country–China. And that’s a prime reason why President Trump has called for the tariffs.

His hope, based on the theories of his economic advisors, is that tariffs will reduce the trade deficit by making Chinese products more expensive for the U.S. to import.

That in turn, Trump and his advisors have suggested, could increase U.S. manufacturing and jobs.

Will it work?

Time will tell. Tariffs are not a one-way street. China has threatened to retaliate with billions of dollars worth of its own tariffs, which could give U.S. manufacturers and exporters a hard time.

Aerospace manufacturer Boeing, for example, has voiced concerns recently that a trade war could harm its U.S. business.

The post What’s a Trade Deficit? appeared first on Stash Learn.

Major indexes fell into correction territory again on Monday, led this time by tech stocks.

The Dow Jones Industrial Average fell 700 points by mid-afternoon. Meanwhile, two other key indexes the S and P 500 and the tech-heavy Nasdaq fell 3.1% and 3.5% respectively.

It’s the third time this year that major indexes have experienced steep drops in a single day.

FANG companies got declawed

Stocks of the so-called FANG companies–Facebook, Amazon, Netflix, and Google–were among the hardest hit. Collectively, those companies have lost $324 billion over the last two weeks, according to reports. But it wasn’t just the large market leaders in tech, companies including social media app Snapchat also suffered losses.

Facebook has been facing pressure following news that it leaked personal data from 50 million users to a firm called Cambridge Analytica, which reportedly gathered the information to create psychological profiles of voters during the 2016 elections, without user permission.

Similarly, Amazon has been the subject of President Trump’s wrath in recent days, as the president has made erroneous claims on Twitter about the company’s tax filing status and use of the U.S. Postal Service for parcel deliveries. While the online retailer has been having a tough day, until recently its stock has been up more than 50% in the past year, according to Bloomberg.

And in related news, chip maker Intel, which provides microchips to some of the largest tech companies around, experienced a steep sell off, after news reports said Apple would switch from Intel chips to microprocessors it manufactures itself, by 2020.

Apple is reportedly one of Intel’s biggest sources of revenue.

Is it “Groundhog Day?”

There have been two other stock big sell-offs over the past few months. In February, for example, fears about inflation led to the steepest decline markets had experienced in more than a year.

Stocks of the so-called FANG companies–Facebook, Amazon, Netflix, and Google–were among the hardest hit.

And in late March, fears about a trade war with China sparked a smaller sell-off in the major indexes. On Monday, China announced it would hit back against $60 billion of U.S. tariffs on its own products, with tariffs on 128 U.S. products, including farm and agricultural exports.

Good to know: April is the beginning of the second quarter, which means earnings are due for most public companies for their first quarter. Many of the leading tech companies are expected to report strong earnings, according to some market analysts.

Is this kind of volatility normal?

Yup. Volatility is considered a normal part of market behavior–and corrections aren’t all that unusual.

In fact, according to some experts, volatility tends to appear in markets in clusters. That means large market swings tend to follow each other, just as small market movements do.

Things to think about when markets go down

Consider turning on Auto-Stash and let the power of dollar-cost averaging do its work.

Keep on investing small amounts of money on a regular basis into your diversified Stash portfolio. You’ll automatically capture market highs and purchase more of your investment when it dips.

The post Why Did the Market Drop (Again)? Trump, Tariffs, and Tech appeared first on Stash Learn.

Read more about recent US tariffs on aluminum and steel.

That could increase costs for U.S. consumers, and also reduce demand for U.S. exports, which could dent our economy, according to experts.

Why is this happening?

Over the last 30 years, the U.S. has entered into numerous trade treaties.

You may be familiar with the North American Free Trade Agreement (NAFTA). These treaties are complex multilateral agreements that favor negotiations between all countries that sign.

Winning trade wars isn’t easy, as history has shown us.

Agreements like this reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

In 2017, the U.S. signed a less comprehensive trade treaty with China, but Trump has said recently that products from China–in particular steel–have cost the U.S. 6 million jobs, and have caused 60,000 factories to close. Economists reportedly dispute these figures.

Trade wars: High school history class flashback

Winning trade wars isn’t easy, as history has shown us. Many analysts are digging back into their history books to remember the Smoot-Hawley Act tariffs and the “trade wars” that collided with the Great Depression of the 1930s.

The Act bumped the average U.S. tariffs to 45 percent from 38 percent. Still, other countries were not happy with the U.S. in the early 1930s. Several countries, including Canada, immediately responded with their own tariffs. Soon other countries jumped into the fray and a global trade war broke out in 1931, thus sparking a European financial crisis.

While Smoot-Hawley has been blamed for worsening the Great Depression, most economists say the conditions that drove down the U.S. economy were far more complex than that. The tariff-related Act was introduced before the Great Depression, although its impact was largely felt during those tough subsequent years.

President Richard Nixon temporarily introduced tariffs back in 1971 to fight stagflation. President George W. Bush briefly introduced steel tariffs in 2003 but repealed them several months later after the tariffs were seen to have negatively affected the economy.

What makes this time different?

The move by this administration is unusual because the president is justifying them on the grounds of national security.

Read more about how China is responding to President Trump’s tariffs.

How can a trade war affect U.S. consumers?

There are concerns that a trade war will increase costs to buy goods for U.S. consumers. There are also concerns that tariffs could cost workers their jobs in various manufacturing industries, as expenses increase.

On the import side, numerous industries depend on cheap steel to manufacture products. Tariffs are likely to increase the cost of steel at home, and those increases are likely to be passed along to consumer in the form of higher prices.

On the export side, China is likely to place tariffs on our agricultural products, which will make these products more expensive to sell in China.

Similarly, tariffs could hit tech companies such as Apple, which reported that more than 20% of its global sales in this past quarter came from China and the greater China region, which includes Hong Kong and Taiwan.

The post What’s a Trade War? appeared first on Stash Learn.

Markets are reacting to the unexpected news of a potential trade war with China. It’s true that we are in uncharted waters. While Americans have lived through trade wars and tariffs in the past, President Trump cites national security and protecting intellectual property–American innovation and technology–as reasons for the tariffs.

Here’s the thing:

For first-time investors, seeing the market suddenly start going up and down like a roller coaster can be nerve wracking. Here’s our advice:

Turn on Recurring Transactions and keep on adding small amounts into your investments on a regular basis. That’s called dollar-cost averaging, and it’s really important. When you use dollar-cost averaging, you buy more shares on the dips, and fewer on the market highs, which will reduce the average cost you pay for shares over time.

While times may seem strange, market volatility is normal.

We’ve been in a tremendous bull market for a number of years now. Our economy is in solid shape — so solid in fact that the Fed has continued to raise interest rates. Markets have been trading at all-time highs.

Don’t think about the daily or weekly or monthly volatility. Think about the long term and the remember, the markets do go up and down.

If you take a longterm view, markets do go up. On average, if you look at the last 100 years, markets increase slightly more than 8% a year. Going forward, many experts predict a long-term expected annual return for US large cap stocks (i.e., the S&P 500) of 5.9%.”

That said, there are some years where the market is strong and some years where things are pretty bad. This is why you’ve just got to take that long term view when you’re thinking about investing.

So we may be entering a trade war. What can you do?

There are two approaches that we always think about. The first one is you can always move to less volatile investments. If you’re anxious, add bonds to your portfolio. They’re good long-term investments that can help dampen the fluctuations in your returns.

The other option that you have is to ride through the downturn and, if you’ve got little bits of money, periodically add little bits more over time, because you’re effectively dollar-cost averaging, as I’ve said above.

What is a trade war?

You can read our longer piece here. But in short, a trade war is when countries engage in a tit-for-tat over tariffs. In response to U.S. tariffs on Chinese goods and services, China could impose tariffs of its own on U.S. steel, as well as other exports.

The tariffs could also increase costs for U.S. consumers, and reduce demand for U.S. exports, which could dent our economy, according to experts.

How might tariffs increase costs at home?

Think of it this way: just about every manufacturer in the U.S. depends on steel, and costs for steel are about to go up. Businesses that use steel, or sell steel products, are likely to make up for the price increases by passing the higher costs along to consumers.

Over the last 20 years, the U.S. has entered into numerous trade treaties, the most famous of which is perhaps the North American Free Trade Agreement (NAFTA). These treaties, which are complex multilateral agreements that favor negotiations between all countries that sign, have reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

In 2017, the U.S. signed a less comprehensive trade treaty with China, but Trump has said recently that products from China have cost the U.S. 6 million jobs, and have caused 60,000 factories to close. Economists reportedly dispute these figures.

Zoom out and look at the big picture.

Don’t think about the daily or weekly or monthly volatility. Think about the long term.

We have a saying at Stash. It’s all about “time in market, not trying to time the market.”

Selling effectively basically locks in any gain or loss you’ve made, but it sets your losses in stone.

Stay strong. Stay the course. Stay diversified. We’re in this with you.

The post How to Keep Stashing Through Storms (and Trade Wars) appeared first on Stash Learn.

Three key indexes, the Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq all lost more than 2% of their value, according to reports. The Dow lost more than 700 points in afternoon trading.

Markets reacted to fears that the tariffs could prompt a trade war, which has the potential to damage the U.S. economy, and cut down on Gross Domestic Product (GDP) growth.

The tariffs that Trump announced today will target up to 1,300 items produced in China, including aeronautics, high-speed rail, alternative energy vehicles, and high tech products, according to CNBC. It is also meant to punish China for what the administration has said is intellectual property theft from U.S. businesses.

Earlier in March, Trump said he would place a tariff of 25% on foreign steel, and one of 10% on aluminum imports. While China is the largest steel producer in the world, those tariffs will potentially affect metals produced in several countries. Similarly in January, the president announced tariffs on foreign-made solar panels and washing machines.

What are tariffs?

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports. (In some cases, tariffs can be levied on exports.) The tariff is generally calculated as percentage of the import’s total value, including freight and insurance charges.

In principle, governments impose tariffs to make their own products more competitive and affordable, and to generate revenues.

What’s a trade war?

A trade war is when countries engage in a tit-for-tat over tariffs. In response to U.S. tariffs on Chinese goods and services, China could impose tariffs of its own on U.S. steel, as well as other exports.

That could increase costs for U.S. consumers, and also reduce demand for U.S. exports, which could dent our economy, according to experts.

Over the last 20 years, the U.S. has entered into numerous trade treaties, the most famous of which is perhaps the North American Free Trade Agreement (NAFTA). These treaties, which are complex multilateral agreements that favor negotiations between all countries that sign, have reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

In 2017, the U.S. signed a less comprehensive trade treaty with China, but Trump has said recently that products from China have cost the U.S. 6 million jobs, and have caused 60,000 factories to close. Economists reportedly dispute these figures.

China threatens retaliation

Chinese officials said they would take whatever action they deemed necessary to protect their interests in the face of new tariffs. That could include placing tariffs of their own on the $19.4 billion of agricultural products the U.S. ships to China each year, the majority of which is soybeans, according to reports.

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports.

“China absolutely won’t sit back and allow its legitimate rights and interests to be harmed and will take all necessary measures to protect” them, China’s Commerce Ministry said in a statement Thursday, according the Wall Street Journal.

Good to know: As the Trump administration announced the tariffs on China, it also said it would exempt trading partners including Argentina, the European Union, and South Korea from recent aluminum and steel tariffs.

How a trade war could affect you

Meanwhile, various businesses and trade groups expressed fears that the tariffs would increase costs for U.S. consumers, and could potentially result in job losses in the tech sector.

“Increased tariffs and trade wars risk the nearly 2.5 million American jobs associated with trade involving technology products,” Gary Shapiro, president and CEO, Consumer Technology Association, said in an emailed statement on Thursday.  “Such a move threatens U.S. economic growth and wipes out the benefits of our recent tax reform.”

The consumer technology industry represented more than 10 percent of the U.S. gross domestic product in 2017, according to the CTA.

The post Why Did Stocks Just Fall? Trump Stokes Trade War Fears appeared first on Stash Learn.

In reaction, the Dow Jones Industrial Average fell 300 points as markets opened on Wednesday morning, before recovering somewhat, according to reports.

Cohn was Trump’s top economic advisor, heading something called the National Economic Council (NEC).

The market has seesawed in recent weeks, and key indexes are down from record highs reached in January. In addition to Cohn’s departure, experts have cited concerns about inflation and rising interest rates, as well as the possibility of a trade war stoked by new tariffs on aluminum and steel.

So who is Gary Cohn?

Cohn was Trump’s top economic advisor, heading something called the National Economic Council (NEC).

The NEC helps to coordinate policy-making for domestic and international economic issues. It also helps to coordinate economic policy, advice, and goals for the president, and assists in  implementing the president’s economic policy agenda, according to its mission statement.

One objective of the NEC is to ensure the president hears competing points of view on economic policy.

Why did Gary Cohn quit?

Cohn, a Democrat, is a free-trade advocate, meaning he supports open international trade with limited restrictions on exports and imports, as well as trade agreements such as the North American Free Trade Agreement, and the Trans-Pacific Partnership.

These treaties favor negotiations around imports and exports, in contrast to trade wars.

Last week, the president announced he would levy tariffs on aluminum and steel imports of 10% and 25%, respectively.

The move provoked strong international condemnation from trading partners, as well as numerous members of Congress, such as House Speaker Paul Ryan (R-Wis.) It also prompted fears that trading partners would impose tariffs of their own on U.S. products, in retaliation.

Why does Cohn’s departure matter?

Cohn was viewed by many on Wall Street as a voice of reason, according to financial experts who have expressed concerns that his departure adds uncertainty to the Trump administration’s economic direction.

“Cohn has been a voice of moderation, he’s been a voice who understands markets, who understands investors, a voice that’s committed to US playing a leadership role in the global system. His departure leaves an enormous void in that sense,” Nathan Sheets, the chief economist at PGIM Fixed Income told CNBC on Tuesday.

On Wednesday, Treasury Secretary Steve Mnuchin said the administration would go ahead with its planned tariffs on steel and aluminum.

Gary Cohn’s background

Cohn, the grandchild of Polish immigrants and the son of a middle class family from Ohio, struggled with academics due to dyslexia, but ultimately landed a job at Goldman Sachs, according to reports.

He started out in the Goldman’s bonds and commodities divisions and moved on, over a 20-year career at the bank, to become its president and chief operating officer.

He left those positions in 2016 to work for the Trump administration.

Here’s what Goldman chairman and chief executive Lloyd Blankfein had to say about Cohn on Twitter on Tuesday:

Gary Cohn deserves credit for serving his country in a first class way. I’m sure I join many others who are disappointed to see him leave.

— Lloyd Blankfein (@lloydblankfein) March 6, 2018

The post Who is Gary Cohn and Why Does His Departure Matter? appeared first on Stash Learn.

That’s a leading reason why this week, after President Trump announced new tariffs on steel and aluminum, major indexes fell in reaction to the news.

The Dow Jones Industrial Average dropped 420 points on Thursday, and was down more than 300 points in late morning trading Friday. Similarly, the S&P 500 and the tech-heavy Nasdaq each fell more than 1% on Thursday, and both indexes continued their slide on Friday in morning trading.

Fears of an extended trade war–where other countries could retaliate by slapping tariffs of their own on U.S.-made steel and aluminum, rattled investors and the larger markets.

So what are tariffs and trade wars, and how do they relate to the stock market?

Let’s break it down.

What’s a tariff?

Trump has proposed putting a tariff of 25% on foreign steel, and one of 10% on aluminum imports, according to reports.

A tariff, sometimes called a duty,  is a tax typically imposed by one nation on another’s imports. (In some cases, tariffs can be levied on exports.) The tariff is generally calculated as percentage of the import’s total value, including freight and insurance charges.

In principle, governments impose tariffs to make their own products more competitive and affordable, and to generate revenues.

A trade war is when countries engage in a tit for tat over tariffs.

Think of it this way: The additional taxes imposed will make it more expensive for U.S. companies to buy foreign steel, so they may instead turn to steel made by U.S.-based manufacturers.  And if they do buy the more expensive foreign product, the tariff adds to U.S. coffers.

What’s a trade war?

A trade war is when countries engage in a tit-for-tat over tariffs. In response to U.S. tariffs on foreign steel and aluminum, countries such as China, the largest steel producer in the world, could impose tariffs of their own on U.S. steel, as well as our other exports.

That could reduce demand for U.S. exports, which could dent our economy.

In fact, leaders from various countries and trading blocs have already weighed in, suggesting they might do just that.

“The United States must know that if these unilateral decisions were to be maintained and confirmed, they would lead to a strong, coordinated and united answer from the European Union,” Bruno Le Maire, France’s minister of finance, told USA Today.

Chinese leaders have reportedly said they’d do what they need to protect their own markets, and have hinted they might retaliate further by putting tariffs on other U.S. products, such as our exports of soybeans, which totaled about $12.4 billion in 2017, according to reports.

Yet other countries from Canada to Mexico have also voiced concerns.

“Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” Foreign Minister Chrystia Freeland told Reuters in a statement.

Canada is the largest supplier of aluminum and steel to the U.S., and also purchases more than half of its steel from the U.S.

Steel and aluminum are in everything

Soda and beer cans, electrical components for smartphones, automobiles, building construction materials, and paper clips–you can’t go far without encountering aluminum and steel. Both materials are in most everything we use every day.

And executives from some of the leading business councils in the U.S. weighed in about the potential impact of the new tariffs, with some expressing fears that the duties will increase the costs of manufacturing.

“President Trump shouldn’’t undercut his own goal of helping U.S. manufacturers “win” again by imposing counterproductive tariffs on steel imports,” The Association of Equipment Manufacturers said in a statement.

Similarly, Molly Day, vice president of the National Small Business Association, told CNBC:

“This kind of tariff, while seemingly targeted, could have widespread implications and likely will result in increased prices of many goods,” said Day.

Why did the stock market fall?

Perhaps the most potent force in the stock market in recent weeks has been the fear of inflation. Signs of inflation caused major indexes to experience corrections in February, resulting in losses of at least 10%.

And the tariffs could potentially increase costs for U.S. businesses, according to reports, which could cause an uptick in inflation, as businesses raise prices to cope. When inflation rises, the Federal Reserve, the nation’s central bank responsible for setting monetary policy, usually responds by increasing interest rates to combat it.

Higher interest rates, in turn, can make it more expensive for businesses to operate, which can put further pressure on stock prices.

More background

Trump ran on an “America First” platform, which aims to advance the interests of U.S. manufacturers, in part by withdrawing from trade treaties.

Over the last 20 years, the U.S. has entered into numerous trade treaties, the most famous of which is perhaps the North American Free Trade Agreement (NAFTA). These treaties, which are complex multilateral agreements that favor negotiations between all countries that sign, have reduced the threat of trade wars by eliminating many tariffs on exported and imported products.

Trump has argued such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete.

And this isn’t the first time the Trump administration has moved to impose tariffs. In January, it approved steep tariffs on imported solar panels and washing machines.

The move followed a push by domestic manufacturers of both products to get U.S. trade officials to impose taxes on imports, as a way to protect them from international competitors.

China is the largest manufacturer of solar components in the world, and its prices are generally far cheaper than those for American products. American manufacturers of solar products have said a flood of imports from China has hampered their ability to manufacture.

The post Trump’s Tariffs on Aluminum and Steel, What’s the Big Deal? appeared first on Stash Learn.