**Trump Warns of 200% Tariffs on EU Booze**
On March 13 (local time), the three major indexes of the New York Stock Exchange opened in a decline. This was largely due to U.S. President Donald Trump’s warning of a potential 200% tariff on alcoholic beverages imported from the European Union (EU), which has led to investor sentiment weakening. Meanwhile, data showing that wholesale prices remained unchanged in February helped ease inflation concerns for the time being.
By 11:09 AM, the Dow Jones Industrial Average had fallen by 253.3 points (0.61%) to 41,097.63. The S&P 500 declined by 40.29 points (0.71%) to 5,559.0, and the Nasdaq, heavy in tech stocks, saw a decrease of 208.07 points (1.18%) to 17,440.38.
Tesla shares decreased by 4.63% after Trump cautioned against a boycott of Tesla, led by CEO Elon Musk. Despite a 7.59% increase the previous day, the tensions affected the company’s stock. Boeing’s stock dropped 0.23%, even after Citigroup suggested a potential 32% price increase, while Nvidia gained 0.41%.
Trump revealed on his Truth Social platform that if the EU does not revoke its planned 50% tariffs on American whiskey, all alcoholic products imported from the EU would face a 200% tariff. This measure follows the EU’s retaliatory move to include a 50% tariff on U.S. whiskey after the U.S.’s 25% tariffs on all steel and aluminum imports took effect.
Amid concerns of a tariff-induced economic downturn, U.S. Treasury Secretary Scott Besant stated that the focus remains on the long-term health of the economy and markets. Despite confirming the continuation of tariff policies, the intent seems to be to calm markets worried about potential recession.
The Producer Price Index (PPI) for February, released earlier, fell below market expectations. It showed no change from the previous month, significantly below the January figure of 0.6% and expert forecasts of 0.3%. This alleviated some inflation concerns. The broader context shows a 3.2% year-on-year rise, still below both the January rate of 3.7% and market predictions of 3.3%.
The recent Consumer Price Index (CPI) data also helped reassure the market by showing a 2.8% year-over-year increase, below the forecast of 2.9% and the previous month’s 3.0%. However, the ongoing implementation of Trump’s tariff policies might eventually lead to higher import costs and consumer prices.
Paul Stanley, Chief Investment Officer at Granite Bay Wealth Management, expressed concerns that tariffs might trigger significant inflation effects, which could become a “wild card” for the market and the Federal Reserve.
The Federal Reserve is expected to maintain its benchmark policy rate at 4.25% to 4.5% during its upcoming meeting on the 18th-19th. It will closely monitor Trump’s trade policies’ implications on inflation, economic growth, and employment.
Employment data remains positive, with the U.S. Labor Department reporting a decline in weekly jobless claims to 220,000, lower than the revised figure of 222,000 in the previous week and the market expectation of 226,000.
Treasury yields remain stable, with the 10-year Treasury yield at 4.31% and the 2-year yield at 3.99%, both unchanged from the previous day.