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President Donald Trump said that tariffs on goods from Mexico and Canada would go into effect Tuesday, ending a month-long delay and sending stock prices into a swift decline.
On Wall Street on Monday, the Dow Jones Industrial Average closed down around 1.5 percent, as investors digested Trump’s comments. The broader S&P 500 index fell nearly 2 percent. Both market measures are now in the red since Trump’s election win.
Imposing tariffs on everything Americans buy from Mexico and Canada is an extraordinary political gamble by a president who was returned to power by voters angered over years of high inflation. The new import taxes are likely to raise the market prices of Mexican tequila, beer and avocados, along with Canadian crude oil and lumber, testing consumer patience with Trump’s approach.
Tariffs on China will also increase by an additional 10 percentage points for the second time in two months, bringing the total tax on some Chinese products to 45 percent.
“Tomorrow, tariffs — 25 percent on Canada and 25 percent on Mexico. And that’ll start,” Trump told reporters. “So they’re going to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”
Trump’s midafternoon announcement in the Roosevelt Room drew a rapid response from business groups, unions and the affected trading partners. Statements of opposition came from the National Foreign Trade Council, the Distilled Spirits Council and the International Association of Machinists.
Even some supporters of the president’s overhaul of trade policy were critical: “Tariffs are great when they stop unfair trade that could hurt U.S. producers and workers, but we have balanced trade with Canada, and tariffs don’t affect smuggled stuff like fentanyl,” said Lori Wallach, director of the Rethink Trade program at the American Economic Liberties Project.
Many analysts are skeptical of their long-term prospects: “This action effectively destroys the United States-Mexico-Canada Agreement (USMCA), disrupts the integrated North American economy we have spent decades building and forces American manufacturers to scramble to restructure their supply chains,” said William Reinsch, a trade specialist at the Center for Strategic and International Studies. “Meanwhile, the economy will be disrupted, consumers will pay higher prices, inflation will resume, and workers and farmers will lose their jobs, due to the inevitable retaliation.”
Both Canada and Mexico have vowed to hit back. The Canadian government plans to retaliate with levies on as much as $107 billion worth of U.S. goods, including oranges from Florida, motorcycles from Pennsylvania and home appliances from Ohio. The goal is to maximize pain in electoral swing states or those home to Trump supporters.
Several Canadian provinces have said they will implement their own retaliatory measures, including pulling U.S. alcohol from shelves and limiting procurement opportunities for U.S. firms. Ontario Premier Doug Ford has promised to cancel a nearly $70 million contract with Elon Musk’s Starlink and threatened to cut electricity exports to several U.S. states.
China already has imposed retaliatory tariffs on U.S. exports of farm machinery, coal and liquefied natural gas in response to the additional 10 percent tariff Trump put on Chinese goods early last month. His action Monday, citing China’s continued shipments of fentanyl precursors, added an additional 10 percent levy.
Trump is dismissive of the effect of tariffs on prices and inflation, claiming wrongly that foreign countries will pay the tab while acknowledging that Americans may feel “some pain.” The tariffs will cost the typical American household $1,200 each year, according to a separate analysis by economists at the Peterson Institute of International Economics. As a share of after-tax income, that is three times what the top 1 percent of households will pay.
Factories experienced “the first operational shock of the new administration’s tariff policy,” said Timothy Fiore, chair of the Institute for Supply Management’s manufacturing survey committee.
The ISM Manufacturing Purchasing Managers Index for February was 50.3, down from 50.9 the month before, and below Wall Street’s expectations. Input prices rose at their fastest pace since mid-2022, when consumer price inflation was at a 40-year high.
“Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts,” Fiore said. “Although tariffs do not go into force until mid-March, spot commodity prices have already risen about 20 percent.”
Since taking office six weeks ago, Trump has threatened or imposed tariffs on the top three U.S. trading partners; commodities such as steel, aluminum and copper; and products like pharmaceuticals, automobiles and semiconductors. And he has announced a comprehensive rethinking of U.S. tariffs that would match other countries’ tax rates on specific products in a “reciprocal” approach.
© 2015 Mutual Fund Observer. All rights reserved.
© 2015 Mutual Fund Observer. All rights reserved. Powered by Vanilla
Comments
Canada puts Tariffs on $107 Billion of US imports in retaliation
The Canadian government has unveiled a comprehensive set of counter-tariffs on US-made goods after President Donald Trump confirmed that his administration would impose tariffs on Canada and Mexico with "no room left" for delay.
I sincerely hope you good people are battening down the hatches. Our odds of a full blown depression are now quite high. This is how the great depression began - with a trade war.
Alas and alack.
And so it goes,
Peace,
Rono
FWIW, trump has a history of backing away from china tariffs, and dinging friendshoring nations once measuring the net effect of retributive tariffs. in the past, canada and mexico used to just accept it was the cost of being friends with america in general, not a concession to trump.
trump seems ever clueless regarding math\economics in general and tariffs specifically on products one's own country cannot produce (see recent backtracking on coffee), so it seems all driven by grift and cronyism.
as someone reducing risk since the election, i missed most of the trump bump. turns out it was cancer.
Hope this finds you well.
Things here have not yet changed that much as of yet. We have a very fluid border due to work commuters. That said, WTF knows what Washington will do with the borders or how this is going to play out with retaliation.
I'm anticipating a depression and double digit inflation. Half of our farm workers are illegal and in California it's 75%. Oh, and the Chinese will target agricultural products so that's going to crush the farmers.
I've pretty much gone to the mattresses. I've still got some stocks in various forms, but like most of the others, I've increased our cash and bond holdings. Where I'm still playing is with penny silver miners as usual.
The next two years are going to be a schadenfreude multiple orgasm as he throws one voting block after another under the bus.
Take care of yourself and stay safe,
and so it goes,
peace,
rono
So much winning, I can't stand it. 'Sir', please stop all the winning for America!
I'm pretty much trimmed down my 'active' portfolio to stuff I plan to keep regardless, plus a few income positions. So I've got cash to buy into things as opportunities present, such as when the Naranja Suprema de Mar-a-Lago opens his yap or does another midnight screed that sends markets reeling.
My long-long term account, I'm not touching. It DRIPs and does its thing.
tl;dr: buckle up, folks
https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/
Is the 20% new or on top of existing tariffs? There is so much deliberate theatre and misinformation like the Hatians eating their neighbors' cats and dogs, I can not tell what is what without checking everything. (The media has been useless and probably harmful to our health.)
In any case, we all knew it would have net negative impact on the US economy. I was trying to understand the distributional effects.
If trade war escalates, China may also put tariffs in rare-earths EXPORTS, besides restricting exports.
You might want to think that one over, no matter what administration.
There is another article about a plan to sell 443 Federal buildings across the US including many historic and iconic DC headquarters
FBI, DOJ Agriculture, Labor, VA, FTC HHS
I would certainly get out of any REITS exposed to Commercial RE. IT is not clear how easy some of these massive old structures will be to sell or if they are worth much. Trump will probably force the Saudis and the Russians to buy them.
Great Powers cooperate where they can, because the alternative can lead to war. Its strange how people who hate Trump seem to gravitate to policies which gravitate to conflict among nations.
If there is legitimate concern about foreign manipulation of our govt, then Russia's influence is negligible to another foreign state : Israel. In some states, there are laws restricting criticism of Israel... which is strange that Americans would be discouraged from exercising their civil rights of protest against a foreign state. Stranger still, that those who are so animated about negligible Russian influence in American politics, are so very silent about the extensive election interference by Israel..
Israel has controlled US foreign policy in the Mideast for decades. Concerned about foreign influence. End AIPAC and ban dual citizenship among US govt employees and office-holders...
So is Wall Street schizophrenic or is the Washington Post report who wrote that article is a partisan Trump-hater, or an idiot. Or both?
Why is there psychological need to attribute causality to the day to day changes on Wall Street? -- CNBC does this, but they at least are paid to make up stories so people keep watching them.
In the Stone Age, ignorant cave-dwellers assigned divine wrath when a terrible storm hit. That didn't make them too bright, even though they were certain the "gods were angry".
Seems like for the WaPo writer, and perhaps others, Trump is the 'angry sky-god' who is to blame for all of one's ills.
Israel has controlled US foreign policy in the Mideast for decades. Concerned about foreign influence. End AIPAC and ban dual citizenship among US govt employees and office-holders...
Truth, there.
As for Market behavior: Markets respond to whichever news item they might latch onto. And Markets ALWAYS overreact, whether up or down, on a day to day basis. I've been saying so for years. And years.
Trump is a traitorous wrecking ball. He's driving twin agendas: Project 2025 and Moscow's. There can be no denying it by now, except by willful ignorance.
The Big 3 auto companies put pressure on Dump to kick the auto tariffs for both CA and MX another month out.
Dump said "da".
https://brianlangis.wordpress.com/2025/03/04/on-tariffs/
we all know capitalism is extremely adaptable, and the shortest path to a shot at certainty is to join the corruption.
Make America 3rd-world Again
***************************
Markets are generally up in the US and in Europe since the election.
Yes, prior to the tariffs. The waiting period instituted just today re: automakers is a big reason for the relief-rally today. But this is no way to run a country as its President. And Markets are amoral, anyhow. No secret about that. Mr. Market doesn't care if the Orange Leader is a puppet for the Kremlin, as long as people are making money. In the end, Orange Donald only cares about that, too. Only by willful ignorance can one miss that.