Tariffs are Taxes. This is a Tax Hike.

Trump imposed 25% tariffs on Canada and Mexico, amounting to a $230 per annum tax hike. Possible inflation effects will be on top of what our model expects will be a rising inflation environment this year. Tariffs on Canadian energy goods are being offset by OPEC relaxing its production quotas, driving global crude benchmarks lower. Fed expectations have shifted from inflation concerns to growth concerns, with three cuts now expected this year. Signs of economic weakness have already been materializing with the Atlanta Fed’s GDPNow estimate calling for outright contraction in Q1. We see more recession risk now than at any time since the pandemic depression. Trump finds himself with these tariffs, as with Ukraine, having walked away from the table. His approval is holding, but stocks are trading just below where they were before the election. Will Trump listen to that feedback?