Subject: Tarifs effect on markets
From my online broker's newsletter.


DJ Tariffs Catch Traders Off Guard. Why Stock Markets Are Still Misjudging Trump and 5 Other Things to Know Today. -- Barrons.com



So President Donald Trump meant what he said all along and tariffs weren't an empty threat.

The realization finally hit investors Monday and the fallout was brutal. The S&P 500 had its worst day of the year Monday and has now fallen 2.5% since Trump returned to the White House in January.

The index's gains since the election in November are just about intact but it's hard to see them lasting much longer if the levies keep coming. Berkshire Hathaway CEO Warren Buffett is concerned, too -- he said Sunday that tariffs are an act of war and could cause inflation.

The market's conviction that Trump's trade strategy was just one big -- but ultimately harmless -- game of chicken has suddenly evaporated. The 25% tariffs on Canada and Mexico, and a further 10% on China spooked investors but the ramifications don't end there.

All the president's other threats must now be seen in a new, more serious, light -- including his promise to target the European Union next. Stocks across the Atlantic have marched to record highs but were selling off Tuesday. Trump's decision to pause all military aid to Ukraine made sentiment even worse -- another seismic global development for those bothering to keep count at this point.

Yet, after underplaying the risk for so long, there are signs traders still don't fully believe what's in front of them. The Canadian dollar and Mexican peso fell Monday but are still trading significantly higher than the lows they reached early last month, which suggests at least some optimism.

Maybe the market thinks the 25% levies will be short-lived or it's just peak stubbornness at this point and a refusal to accept Wall Street might have been wrong.

Regardless, it leaves stocks exposed to further shocks. The world is changing rapidly and the market is playing catch up.

-- Callum Keown