Morning Bid: Forget threats, the tariff war is underway

Mike Dolan

Wed, Mar 12, 2025, 4:01 AM 8 min read

By Mike Dolan

LONDON (Reuters) - Morning Bid U.S.

What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets

The mere threat of a trade war unnerved markets, but they now have to cope with the real thing, as U.S. tariff hikes on metals imports kick in today and retaliation comes swiftly. I'll discuss the ongoing market gyrations below.

Today, I'll also take a closer look at U.S. President Donald Trump's 'reaction function' toward financial market volatility and consider if it may affect policy decisions going forward.

Today's Market Minute

* Trump's increased tariffs on all U.S. steel and aluminumimports took effect on Wednesday. * TSMC has pitched U.S. chip designers Nvidia Advanced MicroDevices and Broadcom about taking stakes in a joint venture thatwould operate Intel's factories, according to four sourcesfamiliar with the matter. * Greenland's pro-business opposition Demokraatit party,which favours a slow approach to independence from Denmark, wonTuesday's parliamentary election that was dominated by Trump'spledge to take control of the island. * The United States agreed on Tuesday to resume military aidand intelligence sharing with Ukraine after Kyiv said it wasready to support Washington's proposal for a 30-day ceasefirewith Russia, the countries said in a joint statement. * The Republican-controlled U.S. House of Representatives onTuesday passed a stopgap bill to keep federal agencies fundedpast Friday, averting a partial shutdown beginning this weekend.

Tariff tremors

Tuesday was yet another down day for the S&P500 after a volatile session on Wall Street, though Trump's pullback from a late 50% tariff sideswipe against Canada calmed the horses somewhat.

The prospect of a temporary ceasefire in the Russia-Ukraine war also elicited some relief, even if Ukraine is the only side on board with the U.S.-brokered deal so far.

And now slightly punch drunk markets are waiting to see the latest U.S. consumer price report, though last month's inflation is slightly beside the point for the markets and the Federal Reserve - as both are more wary of what's coming down the pike.

Headline and core inflation are expected to have ticked down a notch in February, with the latter falling back below 3%.

Fed officials are in their traditional public blackout period ahead of next week's meeting. Markets expect no further easing until June, as the central bank will need to parse the tariff impact and economic downturn signals.