1 minutes to read by  E.Savoie, CFA, CMT, E.Lascelles Feb 5, 2025

The U.S. appears to be acting on its threat to implement large-scale tariffs. Markets have already responded, and the economic damage – if the current tariff path is fully pursued – would be significant, to the point of recession for Canada and Mexico. Additional tariffs appear forthcoming in Europe and elsewhere.

We would nevertheless flag the significant probability that the scale of these tariffs is lessened before too long. These tariffs run contrary to President Trump’s goal of supporting domestic economic growth and reducing inflation, he has explicitly tied them to desired concessions from other countries, and tariffs have already been removed (Colombia) and delayed (Mexico and Canada) as those countries comply with U.S. policy objectives. Consequently, the most likely scenario in a year’s time remains for tariffs, but of a smaller, more targeted nature that impose only minor market and economic damage.

Our full piece covers:

• Details and basic principles of the new tariff plan as outlined by the Administration

• Five potential tariff scenarios and their impacts

• Market implications of these tariffs over the short and long term

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