Trumps Tariffs

Mickey Perry
Feb 4
2 min read

The market steadied on Monday afternoon following news that Mexico—and later Canada—had secured a 30-day pause on proposed tariffs.

Why the Pause?

Both Canada and Mexico have reportedly taken measures to meet Trump's demands.

Canada

Canada has implemented a $1.3 billion border plan, which includes deploying 10,000 frontline workers and allocating more resources to curb the flow of fentanyl across the U.S.-Canada border.

Mexico

Mexico has agreed to deploy 10,000 National Guard troops to its border with the U.S. to reduce the flow of illegal migrants and drugs.

Is This a Significant Shift?

Not really. Most of these commitments from Mexico and Canada were already in progress. This move seems more like a headline-grabbing strategy from Trump, designed to showcase his deal-making prowess.

The dramatic tariff announcement on a Saturday night, only to reverse course by Monday afternoon, is characteristic of Trump’s approach. However, to his credit, the pressure may have accelerated Canada's and Mexico’s efforts to increase border security.

Where Do the EU & UK Stand?

It seems likely that Trump will soon turn his focus to the EU and the UK. However, this tactic may yield slower results in these regions.

The UK is attempting to balance its position between remaining aligned with the EU and forging an independent trade policy. This could complicate any swift decision-making by the UK government regarding U.S. demands.
The EU, known for its complex and bureaucratic negotiation processes, will struggle to engage in quick, weekend deal-making that would provide Trump with the kind of headline grabbing trade concessions he seeks.

Trade Deficits

For some context here are the trade balances over time as published by the United States Census Bureau, for further information see here: https://www.census.gov/

Markets

The U.S. markets have stabilized but remain slightly elevated, with the Nasdaq currently sitting at 21,551.

For a day trade, this level might be slightly high for initiating a new Nasdaq position.
In the longer term, I expect the Nasdaq to reach around 26,600, though volatility is likely along the way.
The market currently appears to have support at 20,868 and resistance around 21,500, within which trading activity has been fluctuating.