Photo: Reuters/Brendan McDermid

Global equities markets gained across the globe Monday, before early gains in New York trading gave way mid-morning.

Bloomberg cited “uncertainty over the prospect of new tariffs” which “chipped away at industrial and consumer staple shares. Treasuries gained, while the dollar and most commodities fell.”

Market resilience to end last week and to start this week followed softer than expected action on tariffs that many characterized as mere political theater. Trump opened the door to exceptions for allies and corporations, but also suggested he would use the threat as a bargaining chip. Last week Trump said any tariffs would be implemented in a “loving way.”

Tariffs on imported steel and aluminum, pending negotiations on exceptions, will take effect 15 days after the Thursday announcement on all countries except for Canada and Mexico, the first- and fourth-largest steel exporters to the United States. The two countries will have to make good on a renegotiated Nafta deal, Trump says. That will be hard according to people actually watching the negotiations as Trump’s trade team, led by trade czar Robert Lighthizer and commerce chief Wilbur Ross, are asking for things that Canada and Mexico would never give.

Analysts are split on whether Trump will ever actually risk blowing up the economy with a big trade fight, an action which economists widely warn is terrible policy. Trump is hoping to convince the world that he actually believes tariffs are a smart move, as he indicated over the weekend on Twitter:

Regarding consumer staples stocks, cited above as potential victims of the trade action, some are saying they “should be valued like risky bonds” (per Bloomberg):

Consumer staples companies such as Reckitt Benckiser Group Plc and Procter & Gamble Co. should be paying higher dividends to compensate investors for increasing levels of risk, according to the head of a fund that’s beaten 99 percent of peers in 2018.

Reckitt’s dividend yield of 2.8 percent and P&G’s of 3.4 percent is similar to the 2.9 percent on U.S. 10-year government bonds, though these would need to be closer to high-yield debt to tempt Stephen Yiu, chief investment officer at London-based Blue Whale Capital LLP. The makers of products including Dettol cleaners and Gillette razors are facing increased structural pressure due to the growth of online and discount retailers, he said.