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U.S. stocks finished broadly lower Thursday, with the U.S. decision to impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico sparking promises of retaliation by trade partners and reigniting fears of a global trade war. The Dow Jones Industrial Average fell 251.94 points, or 1%, to end at 24,415.84, with the S&P 500 declining 18.74 points, or 0.7%, to finish at 2,705.27.
European markets also traded lower as news emerged of Spain’s prime minister appearing on the brink of being ousted from office. The UK’s FTSE 100 index slipped 0.2% to end at 7,678.20, giving up its earlier gains.
Allies to hit back at US tariffs
Canada and Mexico retaliated on Thursday after Washington imposed tariffs on steel and aluminum imports while the European Union had its own reprisals ready to go, reviving investor fears of a global trade war. The tariffs, announced by Commerce Secretary Wilbur Ross, ended months of uncertainty about potential exemptions and suggested a hardening of the U.S.
approach to trade negotiations.
Tariffs of 25 percent on steel imports and 10 percent on aluminum were due to be imposed on the EU, Canada and Mexico from midnight on 1st June. The Dow Jones Industrial Average lost 1 percent and the S&P 500 shed 0.69 percent. Shares of industrial heavyweights Boeing and Caterpillar both fell, with Boeing down 1.7 percent and Caterpillar down 2.3 percent. European shares opened higher, however. Germany’s Economy Minister said early on Friday the EU might look to coordinate its response with Canada and Mexico.
New Spanish Prime Minister
Spanish Prime Minister Mariano Rajoy was defeated Friday, overwhelmed by the drumbeat of corruption revelations that has grown throughout his seven years in office. In a brief speech to parliament before the vote, Rajoy accepted defeat and wished his successor well. “I will accept as a democrat the result of the vote as it is well-known,” Rajoy said. “I can’t agree with what has been done.”
Elected by a landslide in 2011 as Spain’s property crash spiraled into a full-blown financial crash, Rajoy took a European bailout to fix the country’s banking system and laid the foundations for an economic rebound that’s now in its fifth year. Rajoy, 63, was ousted by a no-confidence vote in Parliament after the anti-establishment group Podemos and Catalan separatist groups lined up behind Socialist leader Pedro Sanchez. Sanchez is due to be sworn in as premier by King Felipe in the coming days.
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