US pre-open: Stocks seen down again on trade war fears

US futures pointed to another downbeat session on Wall Street on Friday as news that the US will impose tariffs on steel and aluminium imports sparked fears of a trade war.

At 1225 GMT, Dow Jones Industrial Average and Nasdaq futures were down 0.8%, while S&P 500 futures were 0.5% lower. Stocks suffered losses on Thursday after President Trump said at a meeting with American steel and aluminium producers that he plans to sign off on measures next week to impose a 25% tariff on steel imports and a 10% tariff on aluminium, to protect US companies. However, domestic manufacturers said the tariffs would drive up prices.

So far, Australia has called the news "disappointing", while Canada said the tariffs are "unacceptable", and European Commission President Juncker said the EU "will react firmly and commensurately to defend our interests".

According to the Washington Post, the vice secretary general of the China Iron and Steel Association said it was "an extremely stupid move".

Trump tweeted on Friday: "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore - we win big. It’s easy!"

Craig Erlam, senior market analyst at Oanda, said Trump has long been accused of prioritising protectionist populist measures over those that will benefit both domestic and global growth, something he has repeatedly dismissed, claiming the measures being considered were aimed at making trade fair and reciprocal.

"He may be able to persuade his core voter base of that but investors are far from convinced, as was evident by the market reaction to the announcement.

"This move isn’t only bad for steel and aluminium producers, protectionist measures such as tariffs are bad for everyone who’s costs have now increased, which impacts companies and end consumers. And these measures are unlikely to be a unique case, other countries will now consider counter-measures against the US which won’t necessarily target this particular sector.

"The announcement has also come at a time when investors sentiment is already fragile, with markets having been rocked by the prospect of more aggressive monetary tightening, which Trump is already partially responsible for after passing the tax reform measures late last year. For someone so obsessed with stock market performance, he’s taking a big gamble with these tariff’s, the benefits of which are questionable."

In corporate news, Foot Locker was weaker in pre-market trade after saying it swung to a net loss in the fourth quarter and issuing a downbeat outlook.

Earnings are still due from JC Penney and JD.com, while the University of Michigan consumer sentiment index is at 1500 GMT.