Trump’s 25 percent tariffs on Canada and Mexico take effect

“He was bad on trade, very bad on trade,” said Donald Trump “with due respect” to Ronald Reagan in a broadcast from the White House. As the president went on, the Fox News coverage included a “Dow Watch” ticker, which showed the markets in free-fall.

Trump was speaking to confirm that 25 percent tariffs would be imposed at midnight on Tuesday on Canada and Mexico, with an additional 10 percent tariff for China (which has already had 10 percent tariffs imposed). This means new barriers for America’s three largest trading partners. “The tariffs, you know, they’re all set. They go into effect tomorrow,” Trump said.

In response to the tariffs announcement — which markets do not seem to have fully priced in — the NASDAQ Composite fell 2.6 percent, while the S&P 500 Index finished the day 1.8 percent down, just worse than the Dow Jones Industrial Average, which was 1.4 percent down. Quite the contrast to Trump’s words on Sunday, when his announcement of a state crypto reserve added $250 billion to the market value of cryptocurrencies in just a few minutes.

Meanwhile, the Federal Reserve Bank of Atlanta released its latest "nowcast" for GDP, forecasting that in the first quarter of the year, America’s economy will have contracted by nearly 3 percent. If the forecast is right — a big if, in fairness to the president — this "Trumpcession" would be the fastest economic contraction America has experienced since the pandemic. Just last month, the same model forecast growth of nearly 4 percent. The GDP decline is not just a result of tariffs but a slew of bad US economic data in recent days, including falling retail sales and consumer sentiment.

But markets are fickle, forecasts are fallible and both abhor the uncertainty that the Trump White House loves to create. Don’t be surprised if the president extracts his demands and tariffs are lifted just as quickly as they’ve been implemented — and don’t be surprised if Trump’s next television appearance has markets on the rise. It might be time to buy the dip.