At its worst level, the Dow fell 840 points today. It tried to recover, but courage failed it again into the close, leaving the Dow down 670 points at the end of the day for a total two-day plunge of 1300 points. Today’s wild action put the S&P 500 in the red for the year and left the Dow flat on the ground for the year. In fact, the S&P is now lower than where it was on Election Day, hours before Trump was elected. Today’s plunges were definitively pinned to Trump’s start of actual (versus the earlier feigned) tariff wars with various nations.
Yet, the market’s action is nothing compared to what really happened.
Canada lived up to its word this morning and immediately retaliated, as anyone would expect it to, with the matching 25% across-the board tariffs it had promised if Trump followed through on his threats. In counter-response, Trump immediately retaliated against the retaliation tariffs, as he said he would, by ordering the doubling of the US tariff on all Canadian goods, except oil, which will get a lower 10% tariff. That means a 50% tariff will exist on all goods from Canada.
Prime Minister Justin Trudeau laid it on the line:
"I want to speak first directly to the American people ... your government has chosen to do this to you," Trudeau said. He laid out how profoundly the ensuing trade war would hurt the American economy — noting markets are down and inflation could rise.
"Your government has chosen to put American jobs at risk at the thousands of workplaces that succeed because of materials from Canada, or because of consumers in Canada, or both," he added.
"They have chosen to raise costs for American consumers on everyday essential items like groceries and gas, on major purchases like cars and homes and everything in between," Trudeau said….
He dismissed Trump's claims that U.S. tariffs were necessary to ensure border security and prevent fentanyl from coming to the U.S. He noted that drug flow and illegal border crossings occur between Canada and the U.S. are incredibly low [less than 1% of the fentanyl that comes into America]….
Trudeau told reports [sic.] Trump wants to "see a total collapse of the Canadian economy, because that will make it easier to annex us," referring to Trump's desire to make Canada the U.S.' 51st state.
In summary, he said, “This is a very dumb thing to do”:
Generations of cooperation with Canada have been ended for now unless Trump backs down. Trudeau’s statements that this is going to be hard on Canada, telling his citizens to prepare for the worst, is strong evidence that Trudeau is not about to back down on a war he didn’t start that includes a battle for acquisition of his nation to put it under Trump’s rule.
Given the additional stories below about provinces in Canada retaliating by cancelling American contracts and about a rapidly widening movement among Canadian citizens to boo Americans and their national anthem at additional kinds of sporting events, I think Trudeau will have enough Canadian support to take that stand. No doubt, the one thing that cemented that resolve among Canadian citizens and their leader was Trump’s claim that he intends to take over Canada, abolishing its government by folding the entire nation into the US government as a 51st state. That is the kind of stuff I’m calling ham-fisted and self-destructive to any of Trump’s better aims.
China, today, also lived up to its threat to impose an additional 15% retaliatory tariff on US goods now that Trump has increased US tariffs against China by 10%. Its new tariffs will kick in on March 10. China has already shown it does not back down to tariff pressure. We are still in the original tariff war with China that Trump promised us would be easy to win—“So easy, just you wait and see.” Obviously, that was another Trump baldfaced campaign lie 8+ years ago. About six years after imposing tariffs on China, the war not only continues unabated but greatly intensified TODAY. So much for “easy.” So, China is not going to back down and has stated today,
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