So Trump decided to wake up Saturday morning and choose violence—economic violence, that is. He slapped 25% tariffs on Canada and Mexico, plus an extra 10% on China, because apparently free trade with our neighbors was getting too boring.
The markets? They absolutely lost their minds Monday morning. The Dow dropped 600+ points faster than your portfolio during a crypto crash. The Nasdaq fell nearly 2%. It was like watching everyone realize they’d been trading on easy mode this whole time.
Here’s the thing about tariffs that politicians won’t tell you: They’re basically taxes that companies pay when importing stuff. And guess who those companies pass those costs to? Spoiler alert: it’s you, the consumer. Economics 101, but apparently we’re all pretending this is rocket science.
Nobel Prize winner Joseph Stiglitz (who knows a thing or two about economics) basically said these tariffs will be “very bad for America and for the world.” When Nobel laureates are using phrases like “very bad,” you know we’re not in Kansas anymore.
The numbers are pretty wild: Canada and Mexico handle about 29% of U.S. imports. That’s not pocket change—that’s your groceries, your gas, your iPhone parts, and probably the lumber for that deck you’ve been planning. The Tax Foundation estimates this could cost the average household over $830 in 2025. Thanks, I hate it.
But here’s where it gets interesting: The market actually bounced back during the day. Why? Because Trump cut a deal with Mexico’s president to pause the tariffs for a month. Mexico agreed to send 10,000 National Guard troops to their border, and suddenly everyone remembered that maybe trade wars aren’t actually easy to win.
Goldman Sachs’ Dave Kostin thinks if these tariffs stick around, they could knock 2-3% off S&P 500 earnings and cause a 5% market drop. RBC agrees, predicting a 5-10% hit. JPMorgan is expecting economic growth to slow by 0.5-1% while inflation jumps the same amount. It’s like economic whiplash.
The sectors getting hit hardest? Agriculture (goodbye cheap avocados), housing (Canadian lumber says hi), energy, cars, and basically anything that crosses a border. Meanwhile, service companies—think software, entertainment, and financial services—are sitting pretty because you can’t exactly tariff a Netflix subscription.
The real kicker? Canada and Mexico are already firing back with their own retaliatory tariffs. It’s like a trade war version of “I know you are, but what am I?” except with actual economic consequences.
Look, maybe this is all just negotiating theater and everything works out fine. Maybe Trump’s playing 4D chess while the rest of us are playing checkers. But right now, it feels like we’re all passengers on the economic equivalent of a roller coaster designed by someone who’s never heard of safety regulations.
The market’s message is pretty clear: uncertainty is expensive, and nobody likes expensive surprises. Buckle up—this ride’s just getting started.