US stocks push higher despite renewed tariff tensions

By Anna Cooban and John Towfighi, CNN

London/New York (CNN) — US stocks gained Monday as investors digested President Donald Trump’s doubling of tariffs on America’s steel and aluminum imports while trade tensions with China flare up once again.

The Dow closed higher by 35 points. The S&P 500 gained 0.41% and the tech-heavy Nasdaq Composite index rose 0.67%. US stocks had opened lower before ticking up.

While stocks rose, the dollar broadly weakened on Monday amid renewed concern about a global trade war. The US dollar index, which measures the dollar’s strength against six major foreign currencies, fell 0.65%.

Meanwhile, Treasury yields rose as investors sold bonds. Gold surged 2.8% as investors sought out a safe haven amid renewed tariff uncertainty.

“We continue to expect market volatility as investors digest fresh tariff headlines and incoming US economic data,” said Ulrike Hoffmann-Burchardi, CIO for global equities at UBS Global Wealth Management, in a Monday note. “Fiscal worries remain and geopolitical tensions are heating up.”

Despite Trump’s tariff plan hitting a legal stumbling block last week, the president upped the ante in his trade war again on Friday.

Trump on Friday claimed that China had violated a trade truce agreed with the US last month that saw both sides drastically roll back tariffs on each other’s goods. In response, Beijing accused the US on Monday of “provoking new economic and trade frictions.”

Trump also announced Friday that he plans to set tariffs on US steel imports at 50% — doubling their current rate — in a bid to protect America’s steelworkers. The higher levy is due to come into force on Wednesday.

“At 25% (the US’ trading partners) can sorta get over that fence,” Trump said at a US Steel facility in West Mifflin, Pennsylvania. “At 50% nobody’s getting over that fence.”

Shares of automakers fell on Monday as Trump’s tariffs are set to sharply raise the cost of importing steel and aluminum. Ford (F) fell 3.85%, while Stellantis (STLA) slid 3.55% and General Motors (GM) dropped 3.87%.

Meanwhile, shares in US steelmakers jumped higher on Monday as the companies can profit from higher prices. Cleveland-Cliffs (CLF) surged by roughly 23%; and Nucor (NUE) and Steel Dynamics (STLD) each gained around 10%.

Earlier, global stocks had mostly dipped Monday. In Asia, Hong Kong’s Hang Seng index closed down 0.6%, while Australia’s S&P/ASX 200 and Japan’s Nikkei 225 finished the day 0.2% and 1.3% lower, respectively. South Korea’s KOSPI closed up 0.1%, however.

Stocks were mostly lower in Europe. The region’s benchmark Stoxx Europe 600 index fell 0.14%. Germany’s DAX slid 0.28% and France’s CAC fell 0.19%. London’s FTSE 100 edged higher by 0.02%.

The European Union vowed Saturday to retaliate unless a “mutually acceptable solution” is reached with Washington. Without an accord, “both existing and additional EU (counter) measures will automatically take effect on 14 July — or earlier, if circumstances require,” Olof Gill, the European Commission spokesperson for trade, told CNN.

Paul Donovan, chief economist at UBS Global Wealth Management, told CNN that, while investors increasingly assume that the US will stage a “rapid retreat” from any new tariff threats, “there seems to be less confidence in that being the case this time” over steel.

He explained that steel tariffs are not at risk from the last week’s US court ruling that temporarily blocked the bulk of Trump’s global tariffs (that ruling was later paused by an appeals court and the levies were restored the next day).

Trump stridently rebuffed the idea last week that he “chickens out” of imposing tariffs. A Financial Times columnist coined the acronym “TACO” in May — “Trump Always Chickens Out” — to describe the president’s repeated reversals and climb downs from his tariff agenda.

“The president’s reaction to questions last Wednesday about investors’ expectations of repeated retreats from tariff positions suggests that Trump does not want the reputation of always climbing down on tariff announcements,” Donovan added. “This is the first tariff announcement since that incident.”

A ‘big setback’ for global steel trade

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said global markets fell Monday as “new fractures in the global trade war open up,” citing Trump’s threatened steel and aluminum tariffs and the flare up in US-China tensions.

“It’s a big setback for steel manufacturers around the world, with orders set to be disrupted yet again,” she wrote in a note Monday.

“Wall Street is set to start the week on a downbeat note,” she added, noting that — as a major importer of steel and aluminum — Trump’s new tariff pledge raises “inflationary concerns in the US… (threatening to) push up costs for manufacturers and the construction industry.”

The US is the world’s largest single-country importer of steel, according to the US International Trade Administration. Last year, Washington imported 26.2 million metric tons of the metal from across 79 countries and territories.

Canada is the largest source of steel and aluminum imports, according to the US International Trade Administration.

“Steel tariffs at this level will create mass disruption and negative consequences across our highly integrated steel supply chains and customers on both sides of the border,” said Catherine Cobden, president and CEO of the Canadian Steel Producers Association, in a statement.

Chris Beauchamp, chief market analyst at trading platform IG, told CNN that Monday’s global market falls had been “relatively restrained” because investors expect Trump to back away from his new steel tariff threat.

“Despite talking a very tough game, the administration seems to have no appetite for the kind of market volatility that would come with a full-blown trade war,” he said.

Oil prices surge as geopolitical tensions flare

Oil prices surged Monday after Ukraine over the weekend conducted a large-scale drone attack on Russian air bases thousands of miles into Russian territory.

The price of WTI crude, the US benchmark, gained 2.85% to $62.52 a barrel. Brent crude, the global benchmark, rose 2.95% to $64.63 a barrel.

The price of oil can spike during heightened geopolitical tension as uncertainty can emerge about potential sanctions and changes to the global production and flow of oil.

Oil prices rose despite OPEC+ over the weekend announcing it would increase oil supply for the third month in a row. Increased supply tends to cause prices to fall, but market watchers had largely expected the move after recent announcements.

“The talk around the campfire was that the OPEC increase would be even larger. That did not pan out,” said Robert Yawger, commodity specialist at Mizuho Securities.

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CNN’s Simone McCarthy, Matt Egan, David Goldman and Elisabeth Buchwald contributed reporting.