The Breakfast Briefing The threat of a more restrictive U.S. trade policy is already having an impact on the economy, a development that stands to keep investors on edge after a period of stock market volatility. President Donald Trump's announced tariffs on steel and aluminum, as well as his threat of further tariffs aimed at China, are driving up the cost of steel, according to the Federal Reserve's Beige Book of economic anecdotes from across the central bank's 12 districts, released Wednesday. The Fed wrote: "There were widespread reports that steel prices rose, sometimes dramatically, due to the new tariff." That contrasted with the otherwise moderate pace of price increases. It's not just economists watching for the impact of tariffs. When Mr. Trump announced the new trade policies last month, the stock market sold off sharply as investors fretted about an escalating back-and-forth between the U.S. and China. The market only recovered as those fears died down. Now, the Beige Book shows, a firm in the Boston district reported that, "'thin gauge foil' is produced only in China and tariffs raised the price three-fold; the contact argued that 'these tariffs are now killing high-paying American manufacturing jobs and businesses.'" Investors are predominantly worried that a trade war could drive up prices of goods or weigh on consumer confidence, both of which could hit companies and their share prices. "If things got a little bit tit-for-tat, then there are, obviously, risks at a minimum that we need to be attentive to," said Martin Anstice, chief executive officer at Lam Research Corp., in a call with analysts this week. Mr. Anstice, whose Fremont, Calif.-based semiconductor company does some business in China, said his company hasn't seen an impact yet. But there are broader concerns that an escalation of tariffs could hamper economic growth, an outcome that would further unnerve investors who are already on edge. Responding to an audience question at a speech on Wednesday, Federal Reserve Bank of New York President William Dudley said, "A tariff war would be a terrible, terribl e outcome." Does the threat of a trade war make you nervous about owning stocks? Let the author know your thoughts at ben.eisen@wsj.com. |