President Trump has announced new tariffs on Canadian and Mexican imports (25%) and Chinese imports (10%), with Canadian fuel imports taxed at a lower 10% rate.
These tariffs take effect on February 4, 2025 and have already sparked responses from Canada, Mexico, and China, including new tariffs on U.S. goods and legal action from China through the World Trade Organization (WTO).
New tariffs can lead to higher prices and slower economic growth. Analysts estimate a small, one-time price increase of about 0.77% in the U.S. GDP growth may also take a 0.4% to 1% hit, depending on how severe trade retaliation becomes.
Markets reacted cautiously to the news:
- S&P 500 futures fell 1.7%
- Bond yields dropped as investors moved toward safer assets
- The U.S. dollar strengthened while the Canadian dollar weakened
While earnings growth for the S&P 500 may slow by about 2.5 percentage points, forecasts still expect 10% growth in 2025, showing resilience in the market.
The Federal Reserve may wait and see how this plays out, while the Bank of Canada could cut rates to support its economy. More tariff hikes are possible, but some believe Trump may use this as a negotiation tool.
Trade tensions bring uncertainty, but staying disciplined is key. History shows that while trade wars create volatility, markets tend to recover over time.
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I think this could be a good chance for Europe to intercede in Canadian and Mexican markets and finally make it out of the economic crisis ... Show More
I guess if Canada and Mexico will start to take responsibility for securing their own boarders and will improve their efforts in preventing illegal drugs being brought to USA Trump might losen the tariffs again.... Show More
1 reply
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