Here’s the latest.
Global trade worries deepened on Wednesday as the European Union and Canada announced billions of dollars in retaliatory tariffs on U.S. exports after President Trump’s across-the-board levies on steel and aluminum imports took effect. Economists worry that the trade fight instigated by Mr. Trump will over time dent economic growth and lift U.S. consumer prices, which rose slightly less than analysts expected in February, according to inflation data released Wednesday.
Mr. Trump has appeared undeterred by the uncertainty and fear that his tariffs, targeted at friends and foes alike, have injected into the global economy. In remarks at the White House, he talked about the so-called reciprocal tariffs he planned to put on other countries in April, and said of the new E.U. retaliation on Wednesday, “Of course I’m going to respond.”
Data showing cooler-than-expected inflation helped stocks rebound, rolling back some losses from recent days. But while the S&P 500 index finished up 0.5 percent for the day, trade tensions and lingering uncertainty continued to weigh on investors and governments.
Hours after Trump’s tariffs on metals took effect, the Canadian government said that it would impose new retaliatory tariffs on $20 billion worth of U.S. imports in response to the latest Trump measures. Canada’s latest moves are centered on steel and aluminum imports, but they also apply to tools, computers, sporting goods and cast iron. They were imposed on top of 25 percent tariffs that Ottawa announced earlier this month after an initial round of levies by Mr. Trump.
Dominic LeBlanc, Canada’s finance minister, said that the government could retaliate again if the Trump administration imposed further levies on steel and aluminum.
Earlier on Wednesday, the European Union announced that retaliatory tariffs of up to about $28 billion on U.S. goods would take effect April 1, in proportion to about $26 billion in tariffs applied by the United States. But European officials, already facing a lackluster economy, emphasized that they were ready to strike a deal with the Trump administration. “Jobs are at stake, prices up — nobody needs that,” said Ursula von der Leyen, president of the European Commission.
The 25 percent tariffs on imports of steel and aluminum have the support of some U.S. domestic producers. But they could hit a range of industries, including car manufacturing, and could increase the prices of domestic metals in the short term — all factors that could potentially slow down the American economy.
Mr. Trump issued tariffs on Canada, Mexico and China last week, though he quickly walked some of them back. Many of the targeted countries vowed to retaliate with their own tariffs. Mexico and Brazil, however, have chosen to hold off. President Claudia Sheinbaum of Mexico said her government would wait until April 2 to decide whether to impose reciprocal tariffs on U.S. goods, but reassured the Mexican people that her government had “a plan.”
China did not directly address the latest U.S. tariffs, although its Foreign Ministry spokeswoman said the government would take “firm measures” to safeguard its interests.
Here’s what else we’re covering:
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Metal suppliers: The latest tariffs will hit producers across several continents. Canada is the largest supplier of steel and aluminum to the United States. Brazil, Mexico, South Korea and Vietnam are also among the top suppliers of steel, while the United Arab Emirates, Russia and China are leading sources of aluminum. Among European countries, Germany is a major steel producer.
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Some U.S. allies hold back: Britain has chosen not to retaliate, as Prime Minister Keir Starmer looks to sign a long-term trade deal with the United States. And Prime Minister Anthony Albanese of Australia said his country would not impose reciprocal tariffs because they would hurt domestic consumers.
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Volatile markets: U.S. stocks rose on Wednesday but Wall Street markets have whipsawed this week, and shares of some big automakers, including Ford and Stellantis, have suffered losses. Stocks in Asia on Wednesday moderated slightly, while shares in Australia fell for a second day.
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Economic impact: Mr. Trump’s threat that more tariffs could be on the way are adding to worries about rising prices. The president has said he could impose penalties on foreign cars and other “unfair” relationships, and on Wednesday he said there could be some cases where his April tariffs were “a little beyond reciprocal, because we’ve been abused for a long time as a country.” He added, “We will be abused no longer.”
Whiplash, confusion and ‘tariff fatigue’ pervade Canada’s steel capital.
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As the longtime home of Canada’s two largest steel plants, Hamilton, Ontario, has earned a reputation as a gritty, blue-collar city. Ron Wells, the president of a local United Steelworkers union, prefers another way to describe it: resilient.
Weathering tough economic times has been a big part of the job over Mr. Wells’s 45 years at Stelco, one of the city’s steelmaking giants. But the trade turmoil produced by President Trump’s on-again, off-again tariffs has caused a certain weariness to set in. The initial whiplash has worn off, Mr. Wells said, and now, “people are starting to get tariff fatigue.”
As Canada braced for the effects of the 25 percent tariff Mr. Trump imposed Wednesday on Canadian steel and aluminum, the central bank lowered interest rates and warned of economic upheaval.
“We’re now facing a new crisis,” said Tiff Macklem, the governor of the Bank of Canada. “Depending on the extent and duration of new U.S. tariffs, the economic impact could be severe. The uncertainty alone is already causing harm.”
In response to Mr. Trump’s moves, Canada on Wednesday said it would impose new retaliatory tariffs on about $20 billion worth of U.S. imports. Those would focus on steel and aluminum, but also apply to tools, computers, sporting goods and cast iron. The measures are stacked on top of the 25 percent tariffs that Ottawa announced earlier this month.
The country is in the middle of a power transition, preparing to swear in a new prime minister, Mark Carney, the former governor of central banks in Canada and Britain. The current prime minister, Justin Trudeau, announced his resignation in January.
“Today is a difficult day for Canada,” Mr. Carney told reporters in Hamilton, while touring a steel plant belonging to ArcelorMittal Dofasco, the city’s other main steel company.
Mr. Carney, alluding to Mr. Trump’s continued threats that Canada would be better off as America’s 51st state, added that he was ready to “sit down with President Trump at the appropriate time, under a position where there’s respect for Canadian sovereignty.”
At a United Steelworkers union hall, tariffs dominated the discussion at the monthly executive meeting on Wednesday, Mr. Wells said. Members lamented losing some overtime shifts, and the company reporting slower orders.
Confusion has settled over Canada’s business community.
“Suddenly, we seem to be Enemy No. 1,” said Matthew Holmes, the executive vice president at the Canadian Chamber of Commerce. “We’re a pretty calm and logical group up in Canada, and it’s just really hard for us to reconcile and rationalize what’s behind this.”
Keanin Loomis, the president of the Canadian Institute of Steel Construction, an industry group, said Hamilton had weathered economic turbulence before, but nothing like the uncertainty — and sense of betrayal — created by Mr. Trump’s tariffs.
“It’s cruel and petty, and there’s no basis for it at all, or at least nothing that’s been explained to us,” Loomis said, adding, “It’s a very raw moment right now.”
Ian Austen contributed reporting from Ottawa.
Tariffs in Trump’s second term in office
As of March 12
Source: Peterson Institute for International Economics, Wells Fargo Economic Insights
The New York Times
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The S&P 500 ended the day 0.5 percent higher, while the tech-heavy Nasdaq rose 1.2 percent, bouncing back from tariff-fueled losses earlier this week. Better-than-expected inflation data spurred the rally, but investors are still wary of Trump’s tariffs and their effects on the American economy.
Stocks are still up for the day, with the S&P 500 half a percent higher. A cooler-than-expected inflation report this morning has helped the benchmark index pare back some losses from the past two days. But today’s rally has been choppy and lost some steam, a sign that trade tensions are top of mind for investors.
President Trump, speaking at the White House, referred to his threat to hit Canada with even larger tariffs on steel and aluminum, which persuaded Ontario to drop a surcharge it had put on electricity being sent to the United States. “It doesn’t make sense that our country allows electricity to be made in another country and sold into us,” Trump said, adding that whoever had arranged that was “not very smart.”
As for many industries, Canada and the United States have a complex and highly interconnected power system, which ensures that electricity is delivered economically and reliably in regions around the border.
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One of the frustrations steel and aluminum buyers have with tariffs is that they don’t just affect imported metals — domestic prices tend to rise, too, at least for a while.
One such buyer is Aegis Technologies Inc., a Pennsylvania-based manufacturer of pipe fittings that go into building sprinkler systems. Its president, Erik Jensen, said he used 100 percent U.S.-made steel, because of its higher quality. But his costs for raw steel rose significantly when tariffs were imposed in 2018, during President Trump’s first term, and the prospect of new tariffs escalated those costs sharply since the beginning of the year.
It’s difficult to switch suppliers, Jensen said, so he just has to accept the higher price and hope he can pass on as much as possible to customers.
“There’s no reason for it, because ore hasn’t gone up, labor hasn’t gone up, transportation hasn’t gone up,” Jensen said. “They’re just taking this as an opportunity to gouge the users of steel, and a little company like mine gets squeezed.”
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President Trump had tough words for the European Union as he met with the Irish leader, Micheál Martin, at the White House today. He said the European Union had treated the United States badly on trade for years, and that now it was America’s turn. Asked if he would retaliate against E.U. tariffs, Trump said, “Of course I’m going to respond.”
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Reporter: “If you put more tariffs on the E.U., will you respond to their retaliation?” “Oh, of course I’m going to respond.” “You will retaliate?” “The problem is our country didn’t respond. Look, the E.U. was set up in order to take advantage of the United States.” “Including Ireland? Is Ireland taking advantage of the U.S.?” “Of course they are.”
Trump talked about the so-called reciprocal tariffs he plans to put on other countries in April, which he has said will match the tariff rates and “unfair” trade practices of foreign governments. He said there could be some cases where his tariffs are “a little beyond reciprocal, because we’ve been abused for a long time as a country.” He added, “We will be abused no longer.”
After lowering the Bank of Canada’s key interest rate by a quarter of a percentage point to 2.75 percent, Tiff Macklem, the central bank’s governor, warned of economic upheaval from U.S. tariffs. Noting that Canada ended last year on a solid economic footing, Macklem told a news conference in Ottawa, “We’re facing a new crisis.” He said that the effects of the tariffs on Canada “could be severe. The uncertainty alone is already causing harm.”
I’m in Hamilton, Ontario’s steelmaking capital west of Toronto. Six of Canada’s 13 steel plants are located in Ontario, and the two largest are in Hamilton. Keanin Loomis, the president of the Canadian Institute of Steel Construction, an industry group, said Hamilton had weathered ups and downs from economic conditions, but none like the uncertainty and sense of betrayal created by President Trump’s tariffs. “It’s cruel and petty, and there’s no basis for it at all, or at least nothing that’s been explained to us,” Loomis said, adding, “It’s a very raw moment right now.”
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One concern that economists have about today’s inflation data is that the reprieve for consumer prices may not last long, especially as tariffs start to have a larger impact. Economists at Employ America, a research firm, described the cooler “core” inflation as a “head fake,” as it strips out volatile food and energy prices.
They noted that, leaving out the automobile, energy and food-related sectors, prices for everyday goods had risen. And they said they now expected the Fed’s preferred inflation gauge, as measured by the core personal consumption expenditures price index, to come in higher for February than initially expected.
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Europe’s economic outlook is being clouded by policies ‘unthinkable only a few months ago.’
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Policymakers are grappling with “exceptionally high” uncertainty, Christine Lagarde, the president of the European Central Bank, said on Wednesday, just hours after the European Commission announced tariffs on U.S. imports in response to levies imposed by the Trump administration. Later, Canada announced a new round of retaliatory tariffs on U.S. imports.
The unpredictability of trade policy and geopolitics, which is likely to mean more large economic shocks, will make it harder for central bankers to keep inflation at their 2 percent target, Ms. Lagarde said.
There was a somewhat bewildered mood among some of the E.C.B. officials, economists and analysts at an annual gathering held in Frankfurt, where Ms. Lagarde delivered her speech. Participants reflected on the rapidly shifting economic environment stemming from the escalating trade tensions and a substantial increase in military spending planned by European countries, particularly Germany.
Under different circumstances, this year’s conference could have seemed like more of a celebration: Inflation in the eurozone slowed to 2.4 percent in February, near the central bank’s target, and policymakers have been able to cut interest rates six times since the middle of last year.
Instead, President Trump’s imposition of sweeping tariffs, and his shifting policies on military aid to Ukraine, are unnerving European leaders. In response, European officials are proposing to borrow more to fund defense and infrastructure investments, significantly altering the region’s fiscal situation. The conference began with one speaker emphasizing the importance of preparing for war in order to avoid war.
“Established certainties about the international order have been upended,” Ms. Lagarde said. “Some alliances have become strained while others have drawn closer. We have seen political decisions that would have been unthinkable only a few months ago.”
When introducing a panel, François Villeroy de Galhau, the governor of the French central bank, said, “We are aware this environment can change tweet by tweet from one day to the next.” He invited panelists to begin their presentations but noted they could be referring to something that may be reversed by the same afternoon.
“We live in a world not only of uncertainty, but still more unpredictability and still more, these last days, irrationality,” he said.
In contrast to Canada and Europe, one big target of the new U.S. tariffs today — Brazil — is practicing restraint. Brazil, the second largest exporter of steel to the United States after Canada, has signaled that it will not retaliate. “President Lula said to remain calm at this time,” Brazil’s economy minister, Fernando Haddad, told reporters on Wednesday. “We’ve negotiated under worse conditions than this.”
Brazil’s president, Luiz Inácio Lula da Silva, made firmer comments on Tuesday. He told reporters that President Trump should “speak respectfully to me because I have learned to respect people and I want to be respected.” Brazilian officials said they held two meetings with the U.S. commerce secretary, Howard Lutnick, and the U.S. trade representative, Jamieson Greer, last week, making the case that the United States had a trade surplus with Brazil and thus should not target the nation with tariffs.
President Claudia Sheinbaum of Mexico, speaking in her daily news conference, said her government would wait until April 2 to decide whether to retaliate with reciprocal tariffs on U.S. goods
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President Trump, greeting Ireland’s prime minister, Micheál Martin, at the White House, said the latest report showing inflation had eased more than expected in February was “very good news.”
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The stock market is trying to find its footing this morning, shifting between gains and losses in a sign that investors are weighing concerns about tariffs against better-than-expected inflation data. The S&P 500 is up about 0.3 percent after briefly falling into the red earlier in the day.
Lutnick, speaking on Fox Business, denied that tariffs would lead to inflation, saying that while they might raise the cost of foreign steel, “that which is made in America does not cost more.”
Data shows that’s not the case. In the past, the increase in the price of foreign steel because of tariffs has typically allowed U.S. manufacturers to increase their prices too, raising profits.
A study by the bipartisan International Trade Commission, for example, found that similar metal tariffs in Trump’s first term raise the price of domestically produced steel by about 0.7 percent on average from 2018 to 2021.
Tariffs result in price increases because that is the point: making imported goods more expensive increases demand for domestically made products, which helps domestic industries. Whether such increases actually result in inflation — meaning continued price increases over time — is more up for debate.
Prices for one closely watched economic indicator, eggs, are still surging.
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Egg prices continued their upward climb in February despite some easing in overall inflation, further straining consumers seeking relief from rising prices in the grocery aisles.
Data from the Bureau of Labor Statistics released on Wednesday showed that egg prices rose 10.4 percent from the previous month, to nearly $5.90 for a dozen large Grade A eggs, as an outbreak of avian influenza continued to contribute to a nationwide shortage. That is slightly lower than the 15-percent-plus surge in January, the largest monthly increase in egg prices in a decade. But since last year, egg prices are up nearly 60 percent.
Food prices more broadly rose 0.2 percent in February, or 2.8 percent compared with the same time last year.
Eggs have driven overall increases in grocery prices in recent months. During the presidential campaign last fall, President Trump blamed the Biden administration for inflation and vowed to bring down prices. But the steep rise in consumer staples, including eggs, has complicated that promise as his tariff policies stoke further concern about inflation.
Producers have blamed the spread of avian flu, which has forced them to cull millions of hens, for tighter supplies and high prices. United Egg Producers, the industry’s trade association, has noted that in 2024, the industry lost more than 40 million egg-laying hens to the virus, while in just the first two months of this year, 31 million were killed.
The Justice Department is in the early stages of an antitrust investigation of major egg producers in the United States after advocacy groups and lawmakers called for regulators to investigate the industry’s pricing practices. Cal-Maine Foods, which is publicly traded and controls about a fifth of the market, reported an 82 percent jump in revenue for the quarter that ended in late November.
The Agriculture Department said in February that it was looking into importing more eggs and increasing funding for efforts to combat the spread of avian flu.
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Asked what it would take to remove U.S. tariffs on steel and aluminum, Howard Lutnick, the commerce secretary, said in a television interview this morning that President Trump views the metals as “fundamental for our national security.”
“The president wants steel and aluminum in America,” he said on the Fox Business program “Varney & Co.” “And let me be clear, nothing’s going to stop that until we’ve got a big, strong domestic steel and aluminum capability.”
Lutnick said that foreign countries like China and Japan had been dumping steel on U.S. markets, or selling it below cost. “We’re going to stop that nonsense,” he said.
The United States imports tens of billions of dollars worth of steel each year. Here is where the country gets the metal.
And here are the places where the United States gets its aluminum. Because steel and aluminum are used to make so many products, tariffs could raise prices that will ripple throughout the U.S. economy.
The Canadian government will impose new retaliatory tariffs on more than $20 billion worth of U.S. imports in response to the latest Trump measures. That is on top of 25 percent tariffs that Ottawa announced earlier this month after an initial round of levies by President Trump.
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Canada’s second round of tariffs are centered on steel and aluminum imports, but they also apply to tools, computers, sporting goods and cast iron. Dominic Leblanc, Canada’s finance minister, said that the government could retaliate again if the Trump administration imposes further levies on steel and aluminum.
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Economists are watching car prices closely to gauge the impact of Trump’s tariffs on inflation. Prices for used cars rose 0.9 percent in February, although those for new vehicles declined slightly.
The big question mark is when tariffs will start to impact consumer prices in a more noticeable way. The only tariffs in place during the period in which the February data covered were 10-percent levies on Chinese imports. Ryan Sweet, chief U.S. Economist at Oxford Economics, said there was not a “discernible impact” on price data in February, including for clothes, furniture and electronics. However, he expects those tariffs, plus those more recently implemented by President Trump on Canada and Mexico, to start to lift consumer prices over the next few months.
U.S. stocks rose at the start of official trading, with the S&P 500 index up more than 1 percent. The rebound, spurred by better-than-expected inflation data, has come after a volatile few days of trading that dragged down markets around the world, as investors struggled to make sense of President Trump’s on-again, off-again policy on tariffs.
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“This may be the calm C.P.I. report before the storm,” said Seema Shah, chief global strategist at Principal Asset Management, referring to today’s Consumer Price Index report. The Fed needs to wait for clarity on tariff policies, “with the inflation picture potentially getting uglier as the months go on,” she said.
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High government debt is seen as stoking inflation, research shows.
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With inflation still above the Federal Reserve’s 2 percent target, economists and policymakers are on high alert for anything that may rekindle price pressures and make the central bank’s job all the more difficult.
Most of the focus in recent weeks has been on the side effects of President Trump’s trade war amid an array of tariffs. But one economist warns that high government debt levels pose a risk, too.
New research by Ernie Tedeschi, the director of economics at the Budget Lab at Yale and a chief economist at the White House Council of Economic Advisers under the Biden administration, underscores the linkage between government indebtedness and higher inflation.
“When you deficit finance policies, that is going to put upward cost pressure on American households,” Mr. Tedeschi said in an interview. Deficit financing involves using borrowed money to pay for government spending, like tax cuts and other policies.
As the recent pandemic era showed, the generous fiscal stimulus programs spearheaded by the Trump and Biden administrations stoked demand when supply chains were severely constrained, ultimately heating up inflation. The Federal Reserve was then forced to take aggressive action by raising interest rates, further increasing the costs borne by households.
Mr. Tedeschi estimates that a sharp rise in the deficit of around 1 percent of gross domestic product — roughly the same cost of extending the tax cuts Republicans are eyeing before they expire this year — would lower the purchasing power of American households as much as $1,250 on average after five years.
If the Fed responded to rising price pressures by increasing interest rates, that would most likely feed through to not only higher mortgage payments but also those related to automobile loans and those for small businesses. Mortgage payments alone could rise as much as $1,240 per year in today’s housing market, Mr. Tedeschi found.
After 30 years, the cumulative loss per household from price pressures could reach $16,000. Household wealth, once adjusted for inflation and with higher mortgage costs factored in, could decline as much as $36,000 on average.
Mr. Trump and his top economic advisers have made reining in government spending a cornerstone of the administration’s economic agenda, with Treasury Secretary Scott Bessent recently calling for a “detox” from government spending.
But economists are skeptical about how much progress the president will make, especially given the haphazard nature so far of the cuts spearheaded by Elon Musk and his Department of Government Efficiency.
The Republican budget plan recently approved by the House calls for $2 trillion in spending cuts but $4.5 trillion in tax breaks.
“If you are truly worried about debt and deficits for debt and deficits’ sake, then you really need to be just as worried about revenues,” Mr. Tedeschi said. “As in, don’t cut taxes.”
Today’s inflation numbers are reassuring, but it’s never a good idea to focus too much on one month of data. Over the past three months, overall consumer prices have risen at an annual rate of 4.3 percent, up from under 3 percent late last year. Core prices over the past three months have risen at an annual rate of 3.6 percent.
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Wine, soy, refrigerators: These products could be hit by European tariffs.
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The European Union is putting tariffs on a range of products from the United States in retaliation to President Trump’s steel and aluminum tariffs, and items that come from Republican-held states rank high on the hit list.
The European Union plans to institute the tariffs in two phases: The first wave will take hold on April 1, and will impact goods that already had tariffs applied during Mr. Trump’s first term, such as bourbon, boats and motorcycles. For certain products like whiskey and Harley-Davidson motorcycles, those tariffs would be as much as a crushing 50 percent.
The second wave is still being figured out, though the list of products that could be affected is already public — and is 99 pages long. In that phase, the E.U. is planning to add levies to goods worth about 18 billion euros, or 19.6 billion dollars, and is aiming for them to go into effect on April 13.
The proposed goods include:
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Poultry, beef and pork
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Soybeans
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Wine and sparkling wine
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Beer
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Pants, shirts and other clothing
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Handbags
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Refrigerators
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Washing machines
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Mowers
Exactly what those tariffs will look like remains to be seen. For now, Europe is consulting consumers, companies and policymakers across the 27-nation bloc as it finalizes the list. Many of the potential targets are largely produced in Republican-held areas, such as crops from the Louisiana district that elected Mike Johnson, the House speaker, and livestock from Nebraska and Kansas.
The goal? Officials want to hit America where it hurts in order to force the United States to the negotiating table, while doing as little damage as possible to Europeans.
Britain has not retaliated for Trump’s tariffs. Here’s why.
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Britain is parting company with the European Union by not retaliating to the tariffs that President Trump imposed on steel and aluminum imports on Wednesday, as Prime Minister Keir Starmer calculates that he can negotiate a trade deal with the United States that would spare his country in the long term.
The approach contrasts sharply with that of the European Union, which hit back swiftly with retaliatory measures on American exports, including Harley-Davidson motorcycles, bourbon and jeans, and top European officials have warned about the uncertainty Mr. Trump’s policies are causing. By contrast, British officials have expressed only muted disappointment that they have been swept into Mr. Trump’s protectionist net.
Mr. Starmer said in parliament that he was “disappointed” by the global tariffs on steel and aluminum but Britain would take a “pragmatic approach.” A new trade deal would include tariffs, he added, and Britain would “keep all options open.”
But Mr. Starmer believes that he can ultimately persuade Mr. Trump that Britain’s trade relationship with the United States is balanced.
Britain runs either an $89 billion trade surplus or a $14.5 billion deficit with the United States, depending on whether one cites British or American statistics. The difference rests in part on how the two sides treat offshore financial centers such as Jersey and Guernsey, which are crown dependencies.
“He was working hard, I’ll tell you that,” Mr. Trump said, after Mr. Starmer lobbied him against tariffs at a White House meeting late last month. “He earned whatever the hell they pay him over there.”
Mr. Starmer has also been pushing Mr. Trump to provide American security guarantees to Ukraine as part of a peace negotiation with Russia. The two leaders have spoken regularly by phone since their meeting, as Mr. Starmer has tried to help heal Mr. Trump’s rift with President Volodymyr Zelensky of Ukraine.
But Britain’s decision not to retaliate to the tariffs could complicate Mr. Starmer’s other big priority: to draw his country closer to the European Union after Brexit. The crisis over Ukraine has given the prime minister a chance to collaborate with the European Union on defense and security, and he clearly hopes it could lead to closer trade and economic links.
The divergent responses to the tariffs are a reminder that, in some respects, Britain still faces a choice between the United States and Europe.
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Stocks rally on inflation data, but investors remain wary of rising trade tensions.
Stocks rose on Wednesday after a tumultuous few days of trading, though the rally was choppy, as investors weighed lower-than-expected inflation data against concerns about President Trump’s tariff policies.
The S&P 500 index rallied at the start of trading, buoyed by data from the Bureau of Labor Statistics showing that inflation eased in February. But the momentum faded as trade tensions took center stage, briefly pulling the benchmark index into the red. By midday, it had rebounded, rising 0.5 percent for the day, while the technology-heavy Nasdaq Composite index rose 1.2 percent.
The rise in stock prices reversed some of the losses from earlier in the week and came after another turbulent trading day on Wall Street, when the White House introduced and then rolled back some of its tariffs. The whipsaw on trade policy has added to investors’ confusion over the Trump administration’s economic plans, and the path ahead on interest rates set by the Federal Reserve.
Global trade turmoil intensified on Wednesday as Mr. Trump’s across-the-board tariffs on steel and aluminum imports took effect, and the European Union and Canada responded with billions of dollars in retaliatory tariffs on U.S. exports.
Recent waves of selling have pushed the S&P 500 index down nearly 9 percent below its mid-February record. Falling more than 10 percent would signify a symbolic milestone known on Wall Street as a correction.
The Euro Stoxx 50 index, which comprises the eurozone’s largest listed companies, was up more than 1 percent on Wednesday. Shares in Britain, Germany and France all broadly gained.
In Asia, stock markets in Japan, South Korea and Taiwan nudged higher. Those indexes were seen as among the most exposed if President Trump broadened tariffs on longstanding trading partners. Hong Kong’s Hang Seng Index, a market that had been a bright spot in Asia, fell nearly 1 percent, a fourth straight day of decline.
As Asian and European markets seemed to regain their footing on Wednesday, the European Union said it was implementing tariffs in retaliation to Mr. Trump’s 25 percent duty on steel and aluminum imports, which went into effect earlier in the day.
The European Commission called the U.S. tariffs on steel and aluminum “unjustified.” It said it would impose levies on a wide range of American goods that would take effect on April 1. Ursula von der Leyen, the president of the European Commission, said the tariffs were nearly equal in value to the metals duties being applied by the Trump administration.
“Uncertainty breeds volatility,” said Alan McKnight, chief investment officer at Regions Bank. “Right now the level of uncertainty continues to ratchet up.”
The CBOE’s Vix volatility index, known as Wall Street’s fear gauge, has risen in recent days, a sign of investor jitters.
“Investors are having a tough time discerning what they should expect on a go-forward basis,” Mr. McKnight said. “It’s not just about it being good or bad. It’s about getting some clarity.”
The volatility is extending to how foreign investors are moving money in and out of markets in Asia. Khoon Goh, head of Asia Research at Australian bank ANZ, said foreign investors are turning “cautious” because of uncertainty regarding U.S. trade policy.
“Rising investor concerns over the impact of tariffs on U.S. growth is spilling over into Asian equities,” Mr. Goh wrote in a report.
Shares in Australia fell for a second straight day after the White House ruled out any exceptions or exemptions on its steel and aluminum tariffs. Last month, Mr. Trump said he would give “great consideration” to exempting Australia because it buys more goods from the United States than it sells. During Mr. Trump’s first term, he exempted Australia from steel and aluminum tariffs.
Anthony Albanese, Australia’s prime minister, said he would not impose reciprocal tariffs because they would only hurt Australian consumers by pushing up prices. But he condemned tariffs as an economic policy, calling them “a form of economic self-harm and a recipe for slower growth and higher inflation.”
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U.S. inflation eased more than expected in February.
Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of higher prices and slower growth as a result of President Trump’s trade war.
The Consumer Price Index was up 2.8 percent from a year earlier, after rising another 0.2 percent on a monthly basis. That was a step down from January’s surprisingly large 0.5 percent increase and came in below economists’ expectations.
The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, also ticked lower. The index rose 0.2 percent from the previous month, or 3.1 percent from a year earlier. Both percentages were below January’s increases.
The data from the Bureau of Labor Statistics underscored the bumpy nature of the Fed’s progress toward its 2 percent goal. Prices for consumer staples, such as eggs and other grocery items, are rising steeply again, but costs for other categories like gasoline fell. A 4 percent drop in airfares in February was a primary driver of the better-than-expected data.
Egg prices rose another 10.4 percent in February, as an outbreak of avian influenza continued to exacerbate a nationwide egg shortage. Prices for eggs are up nearly 60 percent since last year. Food prices more broadly rose 0.2 percent, or 2.8 percent from a year earlier.
The cost of used cars also rose 0.9 percent in February, although new vehicle prices declined slightly. Car insurance, which was a huge driver of the index’s unexpectedly large increase in January, rose again, but at a much slower pace of 0.3 percent. It is up just over 11 percent over the past year.
Housing-related costs also notched the smallest 12-month gain since December 2021, with the shelter index up 4.2 percent. From January to February, it rose 0.3 percent.
The big question mark is when Mr. Trump’s tariffs will start to affect consumer prices in a more noticeable way. On Wednesday, the president hailed February’s data, saying it was “very good news.”
“In a very short period of time we’ve done very well,” he said.
The only tariffs in place during the period covered by the February data were the initial 10 percent levies that Mr. Trump imposed on Chinese imports. Ryan Sweet, chief U.S. economist at Oxford Economics, said there was not a “discernible impact on the C.P.I. in February, including for apparel, furniture and electronic prices.” Rather, he expects the levies on China, which were doubled this month, along with the other tariffs that Mr. Trump is now putting in place, to start to lift consumer prices over the next few months.
Peter Tchir, head of macro strategy at Academy Securities, said the biggest effect would likely show up in the months ahead if Mr. Trump followed through with reciprocal tariffs on trading partners. The president has threatened to lift U.S. tariffs to match what other countries charge on imports, which could raise the cost of products that Americans buy from overseas.
Beyond possible price increases, Mr. Tchir said, he was very concerned about the outlook for the economy as a result of tariffs and the administration’s plans to slash government spending.
“The growth scare is real,” he said.
Uncertainty about the trajectory of the president’s policies has also amplified fears that businesses will begin to freeze hiring and investment in a more significant way as they await clarity on the scope and scale of Mr. Trump’s plans.
Those concerns have also materialized in recent measures tracking how consumers feel about the future. According to the latest survey from the Federal Reserve Bank of New York, consumers’ expectations about their financial situation in the year ahead “deteriorated considerably,” as they braced for inflation sticking to around 3.1 percent. The share of consumers now expecting to be in a worse situation financially a year from now rose to its highest point since November 2023. The average perceived likelihood of missing a future debt payment rose to the highest level since April 2020.
A combination of slowing growth and resurgent price pressures puts the Fed in a difficult position, given its mandate to pursue low, stable inflation as well as a healthy labor market.
As of January, Fed officials justified their ability to hold off on another round of interest rate cuts and wait for more progress on inflation because the economy was doing well. If that resilience starts to show signs of cracking before inflation is fully vanquished, the Fed may be more limited in how it responds.
When the Fed had to deal with a trade war during Mr. Trump’s first term, it lowered interest rates by a total of three-quarters of a percent in 2019 in an effort to protect the economy from weakening further.
In his most detailed comments yet about Mr. Trump’s tariffs, Jerome H. Powell, the Fed chair, acknowledged last week that the economic backdrop this time was different. “We came off a very high inflation, and we haven’t fully returned to 2 percent on a sustainable basis,” he said at an event on Friday.
Mr. Powell added that the Fed’s typical response to tariffs would be to “look through” any one-time increase, but stressed that officials would be watching for any shocks and how long-term inflation expectations were shifting.
“As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves,” he said. “We do not need to be in a hurry, and are well positioned to wait for greater clarity.”
That suggests the Fed will extend its pause on rate cuts when officials gather next week, maintaining the range of 4.25 to 4.5 percent.
Traders in futures markets are betting that the Fed will be able to cut rates three times this year, each by a quarter of a point. That is more cuts than predicted just a couple of weeks ago, reflecting rising anxiety about the economic outlook.
Tariffs add to automaker concerns about higher steel costs.
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President Trump’s imposition of tariffs on all steel and aluminum imports could make it more expensive to produce cars in the United States, dealing another blow to automakers already facing the potential of rising steel prices because of other policies from his administration.
Top of mind for auto executives was the bid by the Japanese steel maker Nippon Steel to buy U.S. Steel. Many of them had hoped that Mr. Trump would be open to negotiating a deal to allow the acquisition to go ahead. Instead, the president confirmed last month that he opposed the proposed deal.
Many auto industry executives believe that the merger could have increased competition and supply in the American steel industry, ultimately lowering steel prices.
In the United States, U.S. Steel and Cleveland-Cliffs are the only major American producers of the high-finish steel favored by automakers. Cleveland-Cliffs has long sought to acquire its rival, but such a merger has raised concerns in the auto industry that it could create a monopoly, giving the combined company the power to raise prices.
By contrast, industry groups expected the proposed Nippon Steel deal to preserve competition in the market. The Alliance for Automotive Innovation, a trade group representing major U.S., Japanese, and European automakers, expressed support for Nippon Steel’s acquisition, saying that a Cleveland-Cliffs-led deal would result in “anti-competitive pricing of materials.”
Even after former President Joseph R. Biden Jr. rejected the deal in January, Nippon Steel continued efforts to revive it. Cleveland-Cliffs has recently indicated that it remains interested in bidding for the financially troubled U.S. Steel. Last month, Mr. Trump reiterated that U.S. Steel must remain American-owned, and said he would block Nippon Steel from taking a controlling stake in the company.
For automakers struggling with challenges such as rising competition from Chinese rivals, costly technological transitions, and signs of a slowdown in U.S. consumer spending, the new steel tariffs are expected to further squeeze profits. The 25 percent levies, which went into effect on Wednesday, are expected to cause steel prices in the United States to rise about 16 percent compared to prices in 2024, according to the research firm Wolfe Research.
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