Stock index futures fall on tariff announcements
All four of the most heavily traded stock index futures tumbled immediately following the president’s descriptions of the 10% across-the-board tariffs on all imports with much higher tariffs on a list of “worst offenders” who have acted against U.S. economic goals. Some of the highest included Cambodia 49%, Vietnam 46%, Iraq 39% and China 34%. The S&P futures contract, which represents a basket of stocks of the largest U.S. corporations, began falling immediately after the Rose Garden announcement on Wednesday, accelerated Thursday and even more so on Friday when China stated they were retaliating with their own 34% tariff to go into effect on April 10.
Cotton crashes on tariff fears
Ninety-five percent of U.S. cotton trades internationally as raw fiber, cotton yarn and fabric. A recent five-year period saw sales at $4.9 billion annually. On Thursday, cotton prices crashed and locked the permissible limit down at 64.8 cents per pound, the lowest price in a month and nearly one-third lower than a year ago. Friday brought another crash of roughly three cents per bushel. Trump’s “Liberation Day” tariffs, including 54% on China and 46% on Vietnam, have roiled export markets.
China and Asia are the biggest importers of U.S. cotton with Vietnam as the largest buyer. China historically buys huge amounts of U.S. cotton, manufactures clothing from it and sells the finished products back to the U.S. Imports to countries facing tariffs are down sharply. China retaliated Friday with 34% tariffs on U.S. goods. Promises of further retaliation add to market uncertainty with fears of inflation, economic slowdown and shifting global demand keeping the cotton market volatile moving forward.
Tariff issues make a comeback in agriculture
Especially on the farm, the president’s new tariffs look more like a rerun of his first term. Back then, the trade war with China cost farmers $27 billion in lost exports and saw the USDA Commodity Credit Corp. spending $23 billion on farm bailouts.
Ag secretary Brooke Rollins is already promising to provide U.S. farmers emergency funding. Some analysts suggest this aid offer is an admission that retaliations from trade partners will hurt American producers. Farm organizations surmise producers don’t like the handouts as much as access to fair trade markets. One ag committee member stated the tariffs will force farms to be lost, equipment prices to rise, closing of export markets and higher costs for middle class families at the grocery store.
Crude, metals, livestock, currencies join the nose dive
By Friday midday, virtually all commodity and financial groups joined the tariff induced bloodbath with most making new lows for the month. Only treasury bond futures and the U.S. dollar index, which typically move opposite of everything else, showed a gain in price.
CME midday prices: Price per bushel: July Soybeans, $10.00; July Corn, $4.67; July Wheat, $5.43. April Livestock per 100 pounds: Cattle, $203.00; Hogs, $87.37. Metals per troy ounce: June Gold, $3,041; May Silver, $29.25. May Copper per pound: $4.38. May Crude oil per barrel: $61.70. The June S&P futures contract has fallen roughly 490 points since last Friday, trading at 5150.00.
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