Gut Reaction of Markets when Donnie Trump Imposes Tariffs on Mexico and Canada

It is interesting to see the gut reaction of financial instruments when King Donnie Trump imposed a 25% tariff on Mexico and Canada that may or may not include oil and may or may not occur depending on how the orange-headed bloviating carnival clown wakes-up tomorrow morning. Trump had committed to making a decision on the tariffs by Saturday, 2/1/25, so the announcement at 3:30 PM EST-ish today was somewhat expected. Markets reacted instantly.

The reaction to Donnie's proclamation was swift and sharp. The US dollar index spikes higher and the euro (EURUSD) collapses lower. The SPX, that is the S&P 500, the United States stock market, falls down the rabbit hole on Donnie's words. Ditto the NDX that is the high flying tech stocks in America, the Nazzy 100. They fell off a cliff and AI (artificial intelligence not arrogant ignorance) darling PLTR also gave up the ghost.

The DeepSeek AI model has Silicon Valley in a tizzy. Company stores report a drop in fleece vest sales. Did you know that India is working on an AI model that can compete with DeepSeek? Yes, they plan on calling it DeepSikh. Rim shot. A little bit of AI humor. Very little.

On the tariff news, yields pop higher and the TBT ETF moves higher in the direction of yields. The TLT ETF moves lower as yields and the TBT popped higher. The 2-year yield popped from 4.19% to 4.21%. The 10-year yield popped from 4.51% to 4.53%. Bitcoin collapses lower on the tariff news.

The orange-headed carnie barker slaps Mexico and Canada in the face with a white glove. What will happen next? Did you see the other day, that Donnie's head looked more pinkish than the usual orange, like a pink grapefruit? He is orange head not pink grapefruit head.

Summing up, the gut reaction when Donnie Trump imposed tariffs on Western-friendly countries, results in the dollar spiking higher, euro collapsing lower, stocks including AI darlings and the major indexes collapsing lower, Treasury note and bond yields higher (notes and bonds sell off), TBT moves higher, TLT moves lower, and bitcoin moves lower. Gold fell on the higher dollar but quickly recovered and chopped sideways during the tariff chaos.

Shortening things, when Mister Tariff, Donnie Trump, imposes tariffs, the following gut reaction occurs; US dollar up, euro down, stocks down, Treasury yields higher, bitcoin lower. Note that the dollar and bitcoin moved opposite on the news. Also, yields nudged higher a touch so notes and bonds were sold off, and stocks were sold off, on the tariff news. Traders and investors were gittin' outta Dodge on all fronts, selling everything, stocks, bonds and bitcoin, since Donnie, the tariff bull in the China shop, is starting to bump around and knock things off the shelves. Sell first and ask questions later. Pretty Little Lie. Good ole boys sitting around playing the Martin's that are made by hand in good ole Pennsylvania. It beats the hell out of working. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.