CLOSINGS: View Closings

Wall Street braces for tariffs after Gary Cohn resignation

Wall Street is preparing for steep tariffs as Gary Cohn leaves the White House.The Dow fell sharply on Wednesd...

Posted: Mar. 9, 2018 10:50 AM
Updated: Mar. 9, 2018 10:50 AM

Wall Street is preparing for steep tariffs as Gary Cohn leaves the White House.

The Dow fell sharply on Wednesday -- by as much as 349 points. It recovered some of those losses for a while, but selling accelerated at midday.

The White House announced after the markets closed Tuesday that Cohn, President Trump's top economic adviser, was resigning. He disagreed with Trump's planned tariffs on foreign steel and aluminum.

"His departure has caught investors off guard," said Alec Young, FTSE Russell's managing director of global markets research.

Investors were holding out hope that Trump would soften his vow to impose a tariff of 25% on imported steel and 10% on aluminum. Wall Street fears broad tariffs will be the opening salvo in a trade war that could damage the economy.

Cohn's resignation "signals that the Trump administration is absolutely going to move forward with tariffs and the risk of a trade war is now more elevated," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

Related: Gary Cohn's exit stokes fears that Trump will fight a trade war

Brad McMillan, chief investment officer for Commonwealth Financial Network, said the prospect of tariffs will "hurt business and investor confidence, which are two of the pillars holding up the markets."

Cohn, a former Goldman Sachs president, helped design Trump's tax cuts and was one of the administration's leading proponents of free trade. He served as a calming influence on the market.

"He was seen as the voice of economic stability and a spokesperson for financial markets. His resignation leaves the president with a set of economic advisors largely seen as outside of the mainstream, or at least perceived as less aligned with Wall Street interests," said McMillan.

Trump's tariff announcement last week shook Wall Street and led to backlash from top US trading partners, including Canada and the European Union.

The markets recovered on Monday and Tuesday, as investors gained confidence that House Speaker Paul Ryan and other top Republicans would soften Trump's position on tariffs. Cohn's resignation leaves one less voice in the White House to push back.

Ryan Detrick, senior market strategist for LPL Financial, said trade will "continue to be a source of increased market volatility" as more details emerge about the tariffs.

NAFTA talks are also looming in the background. Trump has threatened to tear up the 1994 trade agreement between the United States, Canada and Mexico. The three countries have made little progress on a re-negotiated deal since beginning talks in August.

-CNN's Matt Egan contributed to this report.

Article Comments

Mason City
Clear
19° wxIcon
Hi: 38° Lo: 15°
Feels Like: 19°
Albert Lea
Clear
16° wxIcon
Hi: 37° Lo: 16°
Feels Like: 16°
Austin
Clear
18° wxIcon
Hi: 34° Lo: 15°
Feels Like: 18°
Charles City
Clear
23° wxIcon
Hi: 34° Lo: 17°
Feels Like: 23°
Rochester
Clear
25° wxIcon
Hi: 36° Lo: 18°
Feels Like: 25°
Sunny skies, overnight fog, and above average temps on the way for the weekend.
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Prep basketball highlights across Southern Minnesota

Image

Prep basketball highlights across North Iowa

Image

Prep basketball highlights across Southern Minnesota

Image

48 Hours Preview: Find Jodi

Image

Helping Single Mothers

Image

Local officer receives CIT Officer of the Year Award

Image

Students on public buses

Image

North Iowa Humane Society receives large donation

Image

Friday Evening's StormTeam 3 Forecast

Image

KIMT News at 6 "A" Block Dec. 14, 2018

Community Events