Trade Wars Vs. Tough Negotiating March 7, 2018 For every action there is a reaction. President Trump’s proposed tariffs on steel and aluminum are causing quite a stir in the European community. European leaders will respond by threatening to target U.S. products in an attempt to get the President to reconsider his hard line position. There are over 100 products they will consider putting their own tariffs on if the President goes forth with his plan. The question remains, is the President really going forward with his plan or is he just trying to get leverage in negotiating a better trade deal for the U.S.? Well, it seems that these trade tariffs are a really big deal, so much so that President Trump’s Chief Economic advisor Gary Cohen has decided to hand in his resignation. Mr. Cohen had hopes of convincing the President that these proposed tariffs should not be implemented. The President stood his ground and it seems Mr. Cohen has seen enough, he’s out. The President told all Americans not to worry, because “everyone wants to work in the White House.” The question is, for how long, Mr. President ? The equity markets are not liking the news of Gary Cohen’s resignation as seen by the large decline in the Dow futures market this morning. At the time this report was written (6am Eastern) implied open is called down 334 points. The Dollar has seemed to stabilize for the time being below 90 and that’s helping to keep the price of Gold in its place. But I do expect the dollar to strengthen as the day progresses and the price of Gold should feel the pressure and turn negative on the day. The Equity markets have been reacting to the Trump rhetoric and trading off any tweet or news story. As one Wall Street Financial advisor put it, “this potential trade war takes out all the logic the market investors are used to. In other words, my clients don’t know how or if these tariffs will affect their investments. It’s something the market doesn’t need right now. If this goes through, I question the market’s ability to trade higher, even with the tax cuts and strong corporate earnings.” As Speaker Paul Ryan put it yesterday, “let’s just concentrate on the abusers and surgically attack the issues regarding the steel and aluminum imports without starting an all-out trade war.” Sounds like good advice. In the meantime, the markets will have to continue to interpret what this all means. We all know markets hate uncertainties and will reflect that in the way it trades. Have a wonderful Wednesday. Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.