The president’s executive order imposes a 25% tariff on goods entering the country from Mexico and Canada and 10% on imports from China, with what the White House described as “tentative plans” for these to come into effect on Tuesday at 12:01 a.m. ET.
“I do think the markets are going to react to this,” said Mark Malek, chief investment officer at Siebert Financial in New York. “Until now the market has really been on Trump’s side, but that could change and the market could challenge him for the first time.”
“With any delay in implementation, there will be some view that this is still a negotiating ploy,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
Barclays strategists previously estimated that the tariffs could create a 2.8% drag on S&P 500 company earnings, including the projected fallout from retaliatory measures from the targeted countries.
Goldman Sachs economists have estimated that across-the-board tariffs on Canada and Mexico would imply a 0.7% increase in core inflation and a 0.4% hit to gross domestic product.
Investors widely expect some kind of selloff in stocks and other higher-risk assets when markets reopen on Monday. Gene Goldman, chief investment officer at Cetera Financial Group, said the combination of high valuations, the impact of tariffs on inflation and the effects on Federal Reserve policy would contribute to declines.
“This is one of these big geopolitical events that you can’t predict,” said Colin Graham, head of multi-asset strategies at Robeco in London, ahead of Saturday’s developments. “They just happen and you have to figure out afterwards what you’re going to do.”
With wires
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