(Reuters) - Shares in big U.S. steel companies and manufacturers were under pressure on Friday on uncertainty over the effects of U.S. President Donald Trump’s announcement of a plan to impose tariffs on steel and aluminum.
Steel stocks were volatile and some erased part of the previous day’s gains, as investors worried threats of retaliation from overseas trading partners would halt or water down Trump’s promise of hefty import tariffs.
Shares also fell in sectors that could be hurt by the tariffs - from rising prices for steel and aluminum buyers such as car and machinery makers, to the threat of possible counter-tariffs against U.S. companies such as Harley-Davidson (HOG.N), who sell their products overseas.
Trump struck a defiant tone on Friday, saying trade wars were good and easy to win, after his plan to put import tariffs of 25 percent on steel and 10 percent of aluminum triggered global criticism and a slide in stock markets.
“The President took a dump truck and dumped a heap of uncertainty onto the market,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee. “We have a tailwind from tax reform and when you throw in a cross wind of tariffs the boat starts rocking. Uncertainty brings about selling.”
Harley-Davidson shares fell, last down 3.0 percent, after European Commission President Jean-Claude Juncker told German television that Europe would put tariffs on their motorbikes, as well as bourbon and jeans.
Shares in Caterpillar (CAT.N), a buyer of raw materials and a big exporter of construction machinery products, were down 2.6 percent after falling 2.8 percent in the previous day’s session. General Motors, also a metal consumer and exporter, was down 1.9 percent.
“Does this turn into a trade war? That’s the worst-case scenario,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
In comparison, the broader S&P 500 .SPX fell 0.5 percent after a 1.3 percent drop on Thursday.
While steel companies soared on Thursday, investors edged away from the sector on Friday as their conviction ebbed that the tariffs would be implemented.
After rising 5.7 percent in the previous session, shares in U.S. Steel (X.N) were last down 2.8 percent at $44.73 after hitting a low of $43.22 earlier in the day.
Nucor Corp (NUE.N) shares were down 0.7 percent after rising 3.3 percent the day before.
“There’s clearly equity market disappointment in the Trump proposal. People are probably thinking maybe it’s not going to go through,” said JPMorgan steel analyst Michael Gambardella, adding that the lack of details in Trump’s statement made the industry impact “very hard to predict.”
Two analysts also said a downgrade of U.S. Steel by a big bank could be hurting the sector, on top of weaker than expected results from Olympic Steel (ZEUS.O), which was down 8.6 percent at $21.30.
Shares in AK Steel (AKS.N) were up 0.2 percent at $5.66 after hitting a low of $5.41 earlier in the day. They rose 9.5 percent on Thursday.
Reporting By Sinead Carew in New York, Editing by Rosalba O'Brien