Trump's Tariff Strategy Sparks Market Doubts Amid Affordability Push

The Trump administration's recent imposition of a 25% tariff on all steel and aluminum imports from non-NAFTA countries has triggered unease among financial analysts, who see a contradiction with the administration's renewed focus on reducing household costs. This move affects major suppliers such as South Korea, Japan, and Brazil, with importers including automakers and construction firms already reporting rising input expenses. Specifically, the 25% tariff on steel imports—effective January 1, 2026—has led to a 12% increase in average domestic steel prices, according to internal industry data. Aluminum tariffs have driven up raw material costs by nearly 18% in manufacturing sectors reliant on imported alloys. These increases are occurring at a time when inflation remains above the Federal Reserve’s 2% target, undermining efforts to stabilize consumer prices. Market participants are particularly concerned about the ripple effects on durable goods. For instance, manufacturers of HVAC systems and appliances, which rely heavily on aluminum and steel, have begun signaling price hikes ranging from 6% to 9% across their product lines. Major retailers such as Home Depot and Lowe’s have seen early signs of reduced margins due to higher inventory costs, raising broader concerns about retail pricing stability. Investors are now reassessing corporate earnings forecasts, particularly for industrials and consumer goods sectors. The S&P 500 industrial sector has posted a 3.2% decline since the tariffs took effect, while the broader materials index has underperformed by 4.7%. Analysts note that the policy may inadvertently fuel inflationary pressures, directly contradicting the administration’s affordability messaging.