Over the weekend, US President Donald Trump announced that his promised 25% tariffs against Canada and Mexico will go into effect tomorrow, Tuesday, Feb 4th.
A 10% tariff will apply to Canadian energy exports and an additional 10% levy has been placed on goods from China.
As a result, global stock markets took a hit and investors were rattled by what major news outlets are calling a “Trump tariff tantrum”.
Shock to the stocks
Stocks dropped Monday morning, with the S&P 500 sliding down almost 2%. Losses were cut when the US agreed to pause Mexico’s tariffs for one month and negotiate a new trade deal.
The Dow Jones Industrial Average was down just 46 points, or 0.1%, a significant difference from earlier losses of 665 points. The S&P 500 dropped 0.6% after decreasing by 1.93% earlier today. The Nasdaq Composite fell 1% and the iShares MSCI Mexico ETF (EWW) rebounded to 2% (CNBC).
In London, the FTSE 100 share index decreased 1.4% from last Friday’s record high, before regaining some of its losses to 1.1%.
Germany’s DAX index lowered by 1.5%, while France’s CAC 40 was down by 1.2%. Spain’s IBEX dropped 1.2% and Italy’s FTSE MIB lost 0.7% (BBC).
While the U.S. dollar strengthened, leading cryptocurrencies suffered. Bitcoin dropped below $100,000, to a low of $95,279 (Cointelegraph). The price has since bounced back up to $98,856.
The Canadian dollar has slumped to a 20-year low while the current value of U.S. Dollar Index is 108.802 USD, showing a 0.92% rise in the past 24 hours (Trading View).
Trump has deemed the tariffs necessary to hold its 3 largest trading partners accountable for “infiltrating the US with drugs and illegal immigration”.
Fentanyl facts
In a post on Truth Social, Trump stated this decision will “protect” Americans “because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.”
Trump and JD Vance have repeatedly claim that undocumented immigrants are to blame for the influx of fentanyl coming into the US, among a slurry of other crimes.
An NPR-Ipsos poll from 2022 found that nearly 4 in 10 Americans believe that “most of the fentanyl entering the U.S. is smuggled in by unauthorized migrants crossing the border illegally”.
However, federal data analyzed by KFF shows that most fentanyl enters the US through legal entry ports and is primarily trafficked by US citizens, not migrants.
The reinforcement of these beliefs and attitudes aligns with the Trump administration’s eradication of Diversity, Equality and Inclusion programs — even to the extent of blaming DEI on the fatal plane crash of American Airlines flight 5342.
Many political figures and economists have pointed out a running theme of weaponizing discrimination to distract and divert attention from the consequences of some of Trump’s executive orders.
However, Trump haphazardly warned of impending economic hardship through a new social media post stating:
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),”“BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
Canada calls its shots
Canada has retaliated to the 25% tariffs Trump signed off on by imposing $155 billion in counter-tariffs in two phases (CBC).
First, the $30 billion will be implemented on Tuesday and the remaining $125 billion will take effect in 21 days.
The first phase will apply to American products such as:
- Orange juice
- Peanut butter
- Wine, spirits, and beer
- Coffee
- Appliances
- Apparel
- Footwear
- Motorcycles
- Cosmetics
- Pulp and paper
The second $125-billion phase will affect the following:
- Passenger vehicles and trucks
- Steel and aluminum products
- Certain fruits and vegetables
- Aerospace products
- Beef, pork, and dairy
- Recreational vehicles and boats
Country-wide, Canadian consumers and businesses alike are encouraging a Canada First approach to stimulate the economy.
Social media channels are pouring with posts featuring Canadian businesses and highlighting where to buy locally sourced and produced goods.
As it stands, Prime Minister Justin Trudeau met with Trump earlier today and plan to circle back again later today.
Image source: Johnathan Ernst/Reuters
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