Tariffs? What Tariffs?

I’ve been thinking for a while now that the market could use some therapy, but after yesterday, I’m absolutely convinced. Especially since it’s living in an increasingly toxic environment—one that’s becoming more geopolitical than economic—and with Uncle Donald back in the picture, things aren’t about to get any easier. Quite the opposite.

So, let’s rewind a bit. After announcing that the new tariffs against Canada and Mexico would take effect on Tuesday, February 4, at noon, the markets went full panic mode. Global car manufacturers got slaughtered because importing raw materials was about to get a whole lot more expensive. Meanwhile, some American journalists actually took the time to write articles asking, Why is Tesla dropping when they build most of their cars in the U.S.? That’s so unfair! Well, maybe Tesla doubled in six months, and some people took the opportunity to cash in. Makes sense, doesn’t it?

More broadly, everyone started realizing that these tariff hikes would cost everyone a ton of money—both inside and outside the U.S. Since Canada and Mexico responded by raising their own tariffs, it became clear that higher costs would mean higher consumer prices, leading to… inflation. Well, return of inflation might be a stretch, considering it never really went away. And since it hasn’t been coming down for the past six months, it wasn’t hard to figure out that these tariffs would only push it even higher.

Even the Fed had to send out a couple of its directors to go on TV and confirm the obvious: if consumer prices rise because of tariffs, inflation isn’t going to drop—on the contrary. So don’t expect any rate cuts from them anytime soon. Then they kindly reminded us that water is wet, fire burns, and any object submerged in water for more than five minutes is considered lost—unless it’s a world-class free diver or a dolphin, but that’s beside the point.

The silver lining? None of the Fed officials who spoke yesterday mentioned hiking rates to combat inflation. No, they wouldn’t dare—because their wives and kids were being held hostage by the CIA to ensure Trump’s master plan went smoothly: slash interest rates while turbocharging inflation with tariffs.

Yes, yes, I’m joking. But still, looking back at yesterday’s market session, it felt like something straight out of a thriller by Harlan Coben or Michael Connelly.

The Plot Twist of the Day

Yes, suspense and sudden twists—because just as global markets were teetering on the edge of a cliff and most car manufacturers were considering pivoting to AI, Mexican President Claudia Sheinbaum announced that she would deploy 10,000 National Guard troops to the U.S.-Mexico border to “prevent drug trafficking, particularly fentanyl, from Mexico to the United States.”

Moments later, Trump announced that he was suspending the implementation of tariffs for 30 days to “see how things unfold.” Global markets breathed their first sigh of relief, immediately realizing that Trump was simply using tariffs as leverage to force his partners into action—bypassing the endless hours, days, weeks, or even months of negotiations that usually lead to nothing. The only question left was: what would Canada do? After all, Trudeau had been posturing defiantly, showing no intention of being intimidated by the man with the orange hair.

Well… turns out, Trudeau was intimidated. Following Mexico’s lead, Canada announced that it would:

1. Implement a $1.3 billion border surveillance plan
2. Deploy 10,000 personnel to the frontlines of border protection
3. Appoint a “fentanyl war chief” to combat drug trafficking
4. Establish a joint U.S.-Canada intervention task force
5. Cut a $200 million check for intelligence operations

In short, everything that had seemed impossible to negotiate for months, Trump managed to secure in the span of a single trading day. Canada, too, got a 30-day tariff suspension in return. I’m not sure if politicians feel invincible after “negotiating” with Trump, but ever since he returned to the White House, it seems like he does whatever he wants—and more importantly, gets whatever he wants.

Speaking of which, Trump has now demanded that Ukraine hand over all its rare earth minerals and precious metals to the U.S. in exchange for American aid. He also confirmed to the press that he definitely intends to slap tariffs on Europe. Just 24 hours ago, several of Macron’s “clown ministers” were boasting about how they would “stand firm against Trump, or else no one would take them seriously.”

Since last night, truckloads of Vaseline have been delivered to the French National Assembly and the Élysée to help them “stand firm” against Trump. If Macron or Scholz prove to be as “firm” as Trudeau, the EU tariffs should be settled within 12 minutes of their announcement. Rumor has it that Ursula von der Leyen is already applying for political asylum in Guantanamo.

The 180-Degree Turn of Global Markets

Needless to say, the announcement of a 30-day suspension of tariffs instantly reversed market sentiment at lightning speed. The Dow Jones was down 600 points but clawed back nearly 500 before the close. I’m convinced that if the NYSE had stayed open for just one more hour, the Dow would have ended in the green. The Nasdaq rebounded 300 points from its lows, the S&P 500 gained nearly 100 points, and this morning, futures are back above 6,000 points.

Europe benefited less due to the time difference, but it should catch up this morning. Some stocks remain under pressure, however—Nvidia is still at rock bottom, with ongoing concerns about AI valuations, especially after the DeepSeek debacle. Among the biggest losers of the day: Moderna, Tesla, Franklin Resources, and FedEx. In Europe, just look at any automaker, and you’ll see the biggest bloodbath of the week.

Asia Rebounds While China Strikes Back

This morning, Asian markets are also bouncing back:

• Nikkei is up 0.7%
• Hong Kong is soaring by 1.6%
• China? Doing absolutely nothing.

However, while Trump slapped tariffs on Canada, Mexico, and China, Beijing hadn’t responded—until now. As Trump announced last night that he would speak with the Chinese within 24 hours, Beijing’s Finance Ministry fired back this morning:

New Chinese Tariffs Effective February 10:

• +15% tariffs on U.S. coal & liquefied natural gas
• +10% tariffs on crude oil, agricultural equipment, and certain vehicles

This was the counterstrike everyone expected. Since the announcement, U.S. futures have deflated by 10 points, and crypto, which was flexing just two hours ago, has also taken a hit.

Canada and Mexico folded within half a day under Trump’s pressure—how long will China hold out before striking a deal? Markets seem more resilient today, having already been through this circus yesterday.

One thing’s for sure—if the next four years under Trump are as volatile and chaotic as this, we’re in for a wild ride. I might even have to start waking up even earlier just to keep up! 🚀