Investors discount tariff threats as U.S. economy surges under Trump

What tariff hikes?

U.S. stock prices rebounded Friday, as another strong jobs report showed the economy under President Trump continues to create new positions at a rate of more than 200,000 a month.

The employment news seemed to reassure traders who had been spooked by Thursday’s promises by leaders in Europe, Canada and Mexico to retaliate against Trump’s steel import tariffs with their own new fees on U.S.farm and factory products. The job report looked good all around: “Hiring [and] wages are up, unemployment is down,” to a 27-year low of 3.8 percent, trumpeted chief economist John E. Silvia, told clients of Wells Fargo & Co.

Despite fears of a trade war that could jack up prices for many consumer and industrial goods in the months ahead, the U.S. economy — especially construction and manufacturing — has been so strong that the Federal Reserve will probably raise interest rates again this month, Silvia added. That would boost profits for banks.

There are also signs the tariff fight isn’t as much a long-term job strategy as a tactic to push Europeans, at least, to align more closely with Trump policies worldwide. The fact the U.S. is growing faster than its “so-called trading partners” ought to send the Europeans a message, Larry Kudlow, Trump’s National Economic Council chairman, told CNBC Friday:  Since “our model is working and their model is not,” the Europeans should follow Trump’s lead in pushing China to ease its own protectionist practices. Europeans should also stop building so many plants in Mexico to export products cheaply to the U.S., Kudlow added.