Hey y’all,
The markets are falling off hard this morning as President Trump’s threats about tariffs against some of America’s biggest trade partners have become reality.
Clearly, the markets were underpricing the potential impact of tariffs on the market.
Perhaps, like me, they thought that the tariffs were mostly bark and little bite, that maybe we would never reach this point.
But we have.
This meme from X sums it up well:
And things have gotten ugly. TheStar Spangled Banner is being booed at sporting events in Canada. They’re taking items off the shelves. It’s ugly.
So now the question does become, as the clown above suggests: how long will these tariffs last? Are they just a negotiating tactic? Or will we see steep tariffs imposed on at least China, Canada, and Mexico over the entirety of the next four years (and possibly beyond if Vice President Vance or another Trump-type is elected)?
I am inclined to still believe that they won’t be around forever, although that hope is fading pretty quickly.
Recall Trump’s threats against Colombia a few weeks ago that saw an immediate change in policy. I think if Trump gets his way, and Canada and Mexico create more positive trade agreements for the U.S., then the tariffs will be revoked.
But I can’t be sure. No one can right now.
One thing is certain, though: it’s never as simple as the internet wants you to believe.
If you step on X right now, you’ll see two factions:
There’s the pro-Trump crowd, talking about Canada finally paying its fair share, “owning” Mexico and China, and a huge victory for the United States.
Then there’s the Trump haters, dropping memes like the one above and telling you that only Americans will pay the cost of these tariffs.
As usual, the truth is somewhere in the middle.
But President Trump is certainly modeling himself after President William McKinley, the great protectionist populist from the turn of the 19th century, after whom he just re-named the tallest peak in North America.
I’ll be completely honest that I know nothing about the Presidents of the turn of the century, least of all McKinley, so I did some research.
What were the results of McKinley’s tariffs? Well, much like today, it depends on who you ask.
Some say that they were a huge success, pulling America out of the Panic of 1893, creating jobs, stimulating the economy, and putting the U.S. on the path to be the global superpower of the 20th century.
Others say that they were ultimately destructive, raising costs, killing the farming industry, and toppling the dominos that would lead to the Great Depression.
I stumbled upon a research paper from o3 Deep Research author Kevin Bryan, and thought this passage put it incredibly well:
“Politics are as influential as economics. McKinley’s tariff was as much a political statement as an economic policy. It rallied his base of supporters and was implemented because the political configuration allowed it. Similarly, modern tariffs (such as those under the Trump administration) were often driven by political appeals to certain constituencies (manufacturing regions hurt by import competition, for example, as documented by Autor, Dorn, and Hanson, 2013 in the context of the China shock). In both eras, the debate was highly charged: one side invoking fairness and protection for the ‘forgotten’ producers, the other side warning of higher prices and retaliation. The pendulum swings—1890 high tariffs, 1894 lower, 1897 high again—indicates that enduring resolution is difficult. In today’s debates, we see a similar oscillation: the 1990s-2000s were a period of trade liberalization (NAFTA, China WTO entry), while the 2010s saw a backlash toward protectionism.”
This passage was of course referring to the lighter tariffs Trump imposed during his first administration, but there is a haunting clarity about the same debate we face today.
As Mark Twain says, “history doesn’t repeat itself, but it often rhymes.”
Right now, the markets are freaking out about tariffs, and that might be the strongest incentive for Trump to reduce or remove them. He loves a strong stock market.
But it’s a story in progress…
The only thing we know for certain is that whether or not the tariffs endure, the battles about them certainly will.
To your prosperity,
Stephen Ground
Editor-in-Chief, ProsperityPub
P.S.: If you’re worried about the bearish turn in the markets, Geof Smith will be revealing his bear market game plan, teaching you how to target CASH whether the markets move up, down, or sideways. Join Geof here to learn more
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