Europe threatens tariffs on US peanut butter and orange juice as trade war looms - as it happened
The EC has drawn up a list of American products to target if Donald Trump doesn't back down over steel tariffs
- Latest: EC says it'll hit back against America
- Peanut butter, orange juice and bourbon on provisional tariffs list
- EC: Trump's proposed tariffs are deeply unfair
- US dollar hits two-week low
- Analysts fear trade war
- Full story: Gary Cohn quits as Trump's top economic adviser
9.13pm GMT
And finally, the US stock market has closed....after recovering from its lows.
Shares scrambled back after White House press secretary Sarah Sanders said Donald Trump's plan could include carve-outs for Mexico and Canada.
Stocks rally off lows, Nasdaq closes positive after White House hints Canada, Mexico could be exempt from tariffshttps://t.co/0d9cxLreVS pic.twitter.com/cVBQID0l7K
7.01pm GMT
Here's our news story on Europe's move on tariffs:
The European Union has responded to Donald Trump's threat of a trade war by warning that it will retaliate with tariffs on a range of US imports including peanut butter, cranberries and orange juice.
Reacting to the threat from the US president of 25% tariffs on steel imports and 10% on aluminium, European commissioner for trade Cecilia Malmstrim said on Wednesday the EU was finalising its own list of American exports that could face sanctions, including steel, industrial and agricultural products.
Related: EU: We will retaliate to protection with tariffs on US imports
6.58pm GMT
No sign of a recovery on Wall Street yet. The Dow is still down 1%.
5.28pm GMT
Billionaire investor Carl Icahn has denied acting improperly after selling $31m shares in a company dependent on steel imports.
Icahn, a former special advisor to president Trump, insists that he had no knowledge of the plan to impose tariffs.
"We don't generally comment on rumors, but the recent media speculation regarding our sale of Manitowoc stock calls for a response. We state for the record: Any suggestion that we had prior knowledge of the Trump administration's announcement of new tariffs on steel imports is categorically untrue.
We reduced our position in Manitowoc for legitimate investment reasons having nothing to do with that announcement."
5.08pm GMT
Despite all these trade war worries, the UK stock market has ended the day a little higher.
That's partly thanks to Rolls-Royce, which jumped after beating profit forecasts and promising more cost savings.
#FTSE100 closed today at 7157.84 +0.16%
3.39pm GMT
Time for a quick recap, for any readers just tuning in.
We cannot see how the European Union, friends and allies in Nato, can be a threat to international security in the US....
It is alarming that the US would invoke this article from 1962, to introduce trade restrictions that will mainly impact traditional allies of the United States.
3.39pm GMT
White House advisor Peter Navarro has just told Bloomberg TV that he's not on the list to replace Gary Cohn.
Navarro, a confirmed sceptic on free trade, says there is a "deep bench" at the White House. He also claims that metal tariffs are good for the US economy, and will strengthen national security.
Navarro cites earlier solar panel and appliance tariffs as success stories in case for steel/aluminum curbs, tells Bloomberg TV tariffs are bringing the US solar industry back.
3.19pm GMT
Andre Bakhos, managing director at New Vines Capital of New Jersey, reckons Wall Street is anxious about the prospect of a trade war.
He says (via Reuters):
"It's more of the same jitters we had seen recently, with investors in this case fearing that a lack of confidence in the tariffs by Trump's own people.
Investors are taking risk off the table to see how much more damage in the administration this will cause."
2.58pm GMT
After that early slide the Dow has stabilised, now down 170 points (or 0.7%).
Equipment and machinery giant Caterpillar is the biggest faller, down 1.5%. Demand for its trucks and diggers would fall if the global economy was hit by a trade war.
2.34pm GMT
DING DING! Wall Street has opened for trading, and the US stock market is taking a leg downwards.
The Dow Jones industrial average shed more than 300 points at the open, a drop of 1.2%.
2.29pm GMT
Donald Trump's commerce secretary Wilbur Ross has pledged that the US won't blow the world up in its attempt to tackle trade imbalances.
I guess that's reassuring.....
Commerce Secretary Wilbur Ross told CNBC on Wednesday that President Donald Trump has indicated a degree of flexibility on tariffs for Canada and Mexico.
"We're not trying to blow up the world. There's no intention of that," Ross said in an interview with CNBC's "Squawk Box."
CNBC Exclusive | US Commerce Secretary Wilbur Ross says, "We are not looking for a #TradeWar ; we are looking at sensible policies. Trade tariffs are not going to be a rash thing, it will be well thought out" pic.twitter.com/eH5FRdM0A2
2.19pm GMT
The jump in America's trade deficit will add fuel President Donald Trump's protectionist rhetoric, says Capital Economics.
They add:
Exports fell by 1.3% month-on-month in January, driven by a drop in goods exports, while imports were basically unchanged. In real terms, goods exports fell by 3.3%, compared to a 1.6% decline in real goods imports.
Barring a big rebound in February and March, it therefore looks very likely that net trade will subtract from first quarter GDP growth, albeit by much less than the huge 1.1 percentage point drag seen in the fourth quarter.
The U.S. trade deficit widened more than forecast in January to a post-recession high https://t.co/bxDkhxYKBB pic.twitter.com/q27RoUHt8t
1.48pm GMT
Just in: America's trade deficit has swelled to its widest level in almost a decade.
The Commerce Department reports that the trade gap jumped by 5% in January to $56.6bn. That's more than expected.
U.S. trade deficit $56.6 billion in January, the widest in more than 9 years. That's a result of $76.5 bln goods deficit and $19.9 bln services surplus. pic.twitter.com/OqFUezaxAj
*U.S. JAN. TRADE DEFICIT WIDENS TO $56.6 BLN; EST. $55 BLN
1.42pm GMT
Newsflash: US Steel has announced that it is reopening some operations at its site in Granite City, in Illinois - and giving Donald Trump the credit.
Our Granite City Works facility and employees, as well as the surrounding community, have suffered too long from the unending waves of unfairly traded steel products that have flooded U.S. markets
The Section 232 action announced by President Trump last week recognizes the significant threat steel imports pose to our national and economic security. The President's strong leadership is needed to begin to level the playing field so companies like ours can compete, win and create jobs that support our employees and the communities in which we operate as well as strengthen our national and economic security.
US Steel CEO: Calling back 500 workers idled in Illinois. "This feels like the beginning of a renaissance for us." @SquawkCNBC
David Burritt, ceo of US Steel tells CNBC he is calling back 500 workers to plant in Granite City, Illinois. "This feels like the beginning of a renaissance for us"" #tariffs #Trump #Cohn #SteelTariff
1.34pm GMT
The US stock market is still on track to fall when trading begins at 9.30am New York time (2.30pm in the UK).
The Dow is being called down 250 points, or around 1%.
1.28pm GMT
Breaking: Some blisteringly hot US jobs figures just landed.
Private sector companies across America created 235,000 new jobs in February, smashing forecasts for 195,000.
"The job market is red hot and threatens to overheat.
With government spending increases and tax cuts, growth is set to accelerate."
1.01pm GMT
The threat of new tariffs on US goods being sold into Europe hasn't forced President Trump to back down.
He's tweeted a defence of his 'Make America Great Again' policy:
From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again! #MAGA
12.56pm GMT
Here's Associated Press's take on Europe's threat to impose tariffs on a range of US goods if Donald Trump presses on with steel and aluminium tariffs:
The European Union warned Wednesday that it is ready to retaliate against the U.S. over President Donald Trump's proposed tariffs on steel and aluminum, with counter-measures against iconic U.S. products like Harley Davidson motorcycles, Levi's jeans and bourbon.
Trade Commissioner Cecilia Malmstrim said that the EU, the world's biggest trading bloc, rejects Trump's reasoning that the tariffs are backed by international legal right to protect national security. Should tariffs be introduced, the EU and other partners would take the case to the World Trade Organization, she said.
12.43pm GMT
European Council president Donald Tusk has just weighed in on the issue, saying Donald Trump is wrong over trade wars:
President Trump said: 'trade wars are good and easy to win'. But the truth is trade wars are bad and easy to lose. EU's goal is to keep world trade alive and if necessary to protect European by proportionate responses.
Related: Theresa May and Jeremy Corbyn at PMQs - Politics live
12.30pm GMT
Newsflash: The World Trade Organisation has just revealed that 18 member states, led by China, have raised concerns over America's steel and aluminium tariffs:
Reuters has snapped the details:
12.22pm GMT
12.02pm GMT
Q: How quickly could the EC implement these countermeasure against the US?
Cecilia Malmstrim says that Europe can bring a complaint to the WTO quite quickly.
11.59am GMT
Q: Isn't there a risk that Europe's measures could be found illegal, and could annoy allies around the world?
Cecilia Malmstrom says the Commission is taking very serious legal advice, to make sure that any countermeasures it takes against America over steel tariffs are fully legal.
11.56am GMT
Cecilia Malmstrom repeats that the list of US products which could face tariffs in Europe is still provisional.
Changes could be made, and the final list will be made public very soon.
11.51am GMT
Q: By singling out American peanut butter, orange juice and bourbon, aren't you escalating the situation rather than trying to turn the volume down?
We are eager not to escalate this, Malmstrom insists, adding:
We do not want this to go out of proportion.
We cannot just stay silent when such a major measure could be taken to the EU economy.
11.47am GMT
Q: Might these proposed tariffs on US products break WTO rules, and are member states on side?
Cecilia Malmstrim says the EC is very confident that its proposed actions are compatible with World Trade Organisation rules, and that there is "very close co-operation with member states" on this issue.
11.45am GMT
Q: Are you confident that the talk of trade wars coming out of the White House will end after the special election in Pennsylvania, where there are many steel workers?
Your guess is as good as mine, Cecilia Malmstrim replies. But she notes that Trump did promise to take action on tariffs during his race to the White House.
11.42am GMT
Q: What US products might be hit by the tariffs being drawn up by the EU?
Commissioner Cecilia Malmstrim says that a provisional list has been drawn up. It is being shared with EU member states now, and will be published soon.
Certain types of bourbon are on the list, as are other items such peanut butter, cranberries, orange juice, etc.
Very soon that list will be public, so you will be able to plan your whisky drinking.
Bourbon, peanut butter, cranberries, orange juice on the list, Malmostroem confirms
11.35am GMT
Onto questions...
Q: What do you think about Donald Trump's claim that the EU is unfair over trade, and his threat to impose tariffs on EU cars?
11.30am GMT
The European Commission has been holding intensive talks with officials in Washington for a very long time, Cecilia Malmstrim continues, in the hope of getting the US to rethink its tariffs.
Europe still hopes that it will be excluded from the tariffs, she continues.
11.23am GMT
Over in Brussels, European Commissioner Cecilia Malmstrim has warned that trans-Atlantic relations could be damaged by the looming tariffs on steel and aluminium.
Malmstrim is speaking in Brussels now, outlining the European Union's response to Donald Trump's plans following a 'college meeting' of EU commissioners this morning.
Nice touch - EU's Malmstroem wears biker jacket for the Harley tariffs announcement pic.twitter.com/yqXJoKluHs
We cannot see how the European Union, friends and allies in Nato, can be a threat to international security in the US.
It is alarming that the US would invoke this article from 1962, to introduce trade restrictions that will mainly impact traditional allies of the United States.
11.01am GMT
It's almost 6am in New York, so early bird financial workers will be heading to their desks soon (perhaps via the coffee shop and the gym).
And when they get to work, traders are likely to be hitting the sell button as they react to the latest turmoil at the White House.
US stocks expected to tumble at the open after Cohn resigns https://t.co/UQo3n1RTgz
10.58am GMT
Uh oh...
Bloomberg has seen the EU's draft negotiating guidelines. They're, um... pic.twitter.com/cOIPvgXT7p
10.51am GMT
Veteran City expert George Magnus isn't impressed by the frontrunners to become Donald Trump's new chief economic advisor:
Administration source tells me top two candidates to replace Cohn will be Peter Navarro and Larry Kudlow - two men with VERY different views on trade.
What a choice! One would put trade in deep freeze. The other just does supply side sound bytes. Both b dangerous men https://t.co/o8y0fgGhB1
Wanted: new chief economic advisor to President Trump. Must be angry at the world and ready to rumble. Believes pounding chest is best way to fix trade deficits. Willing to make up alternative facts. Trump University degree preferred.
10.36am GMT
City traders are also fretting about Brexit, as well as trade.
The pound has fallen 0.3% to a three-month low against the euro this morning, slipping to a1.116 for the first time since late November. That means one euro is worth 89.6p.
10.08am GMT
European politicians have been alarmed, and disappointed, to learn of Gary Cohn's resignation.
German economy minister Brigitte Zypries has warned that the situation over tariffs is serious, adding:
"I hope Trump reconsiders. Trade promotes prosperity if it's based on exchange, on working together."
"We hope that eventually this initiative from the U.S. side will not be followed through...
But it's also clear that the EU is going to react if these one-sided tariffs are going to be imposed by the U.S."
9.41am GMT
Back in the UK, house price growth has slowed to a five-year low.
9.34am GMT
Emily Thornberry, the shadow foreign secretary, says she's very worried by the threat of a global trade war.
9.11am GMT
When a president drives his top economic advisor to resign, it creates a vacancy.
So there's plenty of speculation over who might slide into Gary Cohn's seat and chair the Council of Economic Advisors.
Perhaps the most worrying part of the Gary Cohn saga isnt the fact that he has left, but that this means Trump will appoint an economic advisor that is pro-tariffs. Trade wars becoming increasingly likely
Sorry #GaryCohn leaving. I urged him to stay. Did great service for @realDonaldTrump & the nation. https://t.co/JD1a7SoVvN
Will be making a decision soon on the appointment of new Chief Economic Advisor. Many people wanting the job - will choose wisely!
9.06am GMT
Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, has tweeted his support for Gary Cohn:
Gary #Cohn was a solid, constructive interlocutor for me in the @realDonaldTrump administration. We may not have agreed on everything, but I fully respect his consistent views on economic matters and his decision to leave the @WhiteHouse.
8.49am GMT
The markets have been choppy this week, as investors have see-sawed over how alarmed they should be about a trade war.
Share fell sharply on Friday when Trump announced his plans for tariffs on steel and aluminium, but did then claw back on Monday and Tuesday. That optimism has now been punctured.
"I've gone from being a little bit relaxed about the trade-war thing to being quite a lot more nervous.
People are not giving it as much weight as they should be"I don't think people are really thinking this through."
Here's what market players are saying on the departure of "grown up" Cohn https://t.co/1k1rbAv0c8 pic.twitter.com/cy6tZ3M4rG
8.31am GMT
There's plenty of red electronic ink on the European markets this morning, following on from the drops in Asia:
The revolving door in the Whitehouse gets another spin, but the ramifications from Cohn's exit has the potential to be huge. As his departure was announced after the US markets closed we're yet to see a real reaction from the US. But as Cohn was Wall Street's main man in Washington, we doubt they'll be so happy about it.
An advocate of free trade and the biggest critic of tariffs, markets fear his absence from the White House could make the tariffs inevitable. Such tariffs didn't work out well for the Bush administration, so its difficult for markets to fathom a better outcome this time around.
8.17am GMT
Mining stocks are falling this morning, helping to drag the London stock market into negative territory.
That's due to fears that a trade war will hurt global growth, and dent demand for copper, zinc, iron ore and coal.
8.12am GMT
We're not looking at a crash, thankfully, but the markets are certainly edgy this morning:
US Markets indicated sharply lower as Gary Cohn quits White House - Dow Jones down 330 points pre market.
European stock indices open sharply lower as investors react to #Cohn resignation.
8.05am GMT
Britain's stock market has followed Asia's lead, downwards.
The implication is that without the restraining influence of Cohn on Trump, the president will now have a free hand to press ahead with further tariffs and generally up the ante on trade. Clearly he fought back on trade and lost.
7.53am GMT
Goldman Sach's CEO Lloyd Blankfein has tweeted his support for his former colleague, saying he's disappointed that Gary Cohn is leaving the White House.
Gary Cohn deserves credit for serving his country in a first class way. I'm sure I join many others who are disappointed to see him leave.
The breaking news this morning is that Gary Cohn, Director of the National Economic Council, is resigning over the issue.
Trump, for now, seems unbowed. A 25% tariff on EU cars is his response to potential retaliation to the aluminium and steel tariffs by the EU. It won't end there. It is hard not to characterise current market behaviour as complacent.
Markets are in risk-off mode this morning, as news broke just after the US market close yesterday that Presidents Trump's Chief Economic Advisor, Gary Cohn, resigned after a clash with the president due to the implementation of trade tariffs. Cohn was an advocate of free trade and his resignation will dent market confidence in the administration.
This leaves an imbalance in the administration, with an unopposed cadre of officials supporting trade tariffs, which could lead to a trade war developing as protectionist policies take hold.
With Cohn's steadying influence no longer steering economic policy in the Trump administration, in addition to Trump's recommitment to his nationalist trade agenda, market participants are growing increasingly nervous of where the Trump administration is going.
As a result Dow futures plummet 300 points after the bell.
7.49am GMT
The US dollar has hit a two-week low against a basket of currencies this morning, as traders ditch the greenback in favour of the yen.
Dollar hits 2-week low, yen strengthens following Cohn's resignation https://t.co/9eHer93Tum pic.twitter.com/Nf8sxGfsdI
7.40am GMT
A wave of selling swept through Asia-Pacific markets after Gary Cohn's resignation hit the wires.
Nearly every market is in the red - including Australia (-1%), Hong Kong (0.9%), Tokyo (0.7%) and Shanghai (-0.75%).
"For the markets, Gary Cohn's departure certainly points strongly to the likelihood that little can halt the President from going ahead with his tariff plans and may mark more volatility to come for markets," said
"Perhaps the biggest thing to look forward to on this topic will be the details of the plans at the moment, to gain a better gauge of the extent of the impact, whereupon more volatility may be unleashed."
7.25am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Cohn said in a statement issued by the White House that it had been "an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform".
Cohn's departure represents another blow to the administration, which has suffered several high-profile resignations since the election. Hope Hicks, Trump's close aide and communications director, quit last week, and other senior figures to have left include Trump's former chief of staff, Reince Priebus, and former chief strategist, Steve Bannon.
Related: Gary Cohn quits as Trump's top economic adviser
Cohn staunchly opposed the invocation of Section 232 of the Trade Expansion Act to impose steel and aluminum tariffs and his resignation has been taken as a strong indication Trump would go ahead with a set of less measured tariffs, risking a larger trade war.
Adding to those fears, Trump is said to be considering a clampdown on Chinese investment in the US and broader tariffs in retaliation for alleged intellectual property theft.
Hot Topics. WH chief economic adviser Gary Cohn resigns, sends US stock futures & $USDJPY lower. Might be all the confirmation investors need that Trump's protectionist policies aren't just a political show.
Bank of Canada meet today. Need explicit dovish shift to see $CAD lower pic.twitter.com/eUsCF3GLCc
#FTSE100 Index called to open -45pts at 7100 pic.twitter.com/PQZvGVTorA
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