Wall Street Reacts to Trump's Tariffs: Pain Ahead

Trump's tariffs on Canada, Mexico, and China have sent shockwaves through Wall Street, upsetting expectations of robust economic growth in 2025. The tariffs, citing concerns about illegal immigration and fentanyl, are set to take effect on February 4th.

Industry experts weigh in:

Morgan Stanley Public Policy Research Team:

* Tariffs could trigger a recession in Mexico.
* US inflation could rise by 0.3-0.6%, lowering real GDP growth to 1.2-1.6%.
* Treasury duration may benefit from weaker growth expectations.
* US equities may face pressure, with services outperforming consumer goods.

EvercoreISI Economics Team:

* US growth will likely suffer due to decreased exports, reduced investment, and job losses.
* Inflation could increase by 40 basis points, while growth declines by the same amount in the latter half of the year.

EvercoreISI China Strategist Neo Wang:

* Trump's announcement has offended China due to its timing during the Chinese New Year holiday.
* The tariffs could be a negotiating tactic for TikTok or to force Beijing to the negotiating table.

JP Morgan Metals & Mining Analyst Bill Peterson:

* Companies with significant exposures in Canada or Mexico, such as AA, EAF, and CLF, face financial risk.
* GrafTech may have an opportunity to restart its US facility if US graphite electrode prices rise.

22V Research Strategist Michael Hirson:

* China is likely to impose symbolic tariff increases on US imports in the short term.
* Beijing may crack down on companies exporting fentanyl precursors to Mexico to appease Trump.
* Additional tariffs on China imports remain a possibility, raising concerns about broader US-China trade tensions.

Experts anticipate significant market volatility and potential economic consequences in the wake of these tariffs. Investors should closely monitor the situation and adjust their portfolios accordingly.