In a striking revelation on the day of the US presidential inauguration, a leading tech executive voiced concerns about potential retaliation from Canada over proposed tariffs. The executive referred to a concept known in market circles as the “Trump put,” implying that President Trump would react to shifts in the Dow Jones by retracting decisions that negatively impacted market sentiment. Historically, this has often resulted in the president adjusting policies in response to stock market falls.
However, the recent statements from President Trump suggest a departure from this strategy. Following a significant drop in US stock markets, attributed to apprehensions regarding Trump’s economic policies, the president took a bold stance by announcing a doubling of tariffs on Canadian steel and aluminum. This decision was a direct response to a new 25% surcharge on electricity imposed by Ontario Premier Doug Ford on US-bound energy supplies.
Trump’s rationale for this tariff increase is rooted in a long-term vision of restoring wealth, arguing that this must not be measured by the short-term fluctuations of the quarterly results from major corporations. In engaging with Wall Street, Trump’s administration, including Treasury Secretary Scott Bessent, appears to be indicating a new tolerance for short-term economic volatility in favor of a perceived stronger long-term economic outlook.
Adding complexity to the situation, current analyses from the Atlanta branch of the Federal Reserve highlight potential indications of a downturn in the US economy during the first quarter. This analysis raises troubling questions about the potential onset of a recession, influenced, in part, by wavering private sector sentiment alongside government budget cuts. The ongoing back and forth over tariffs has particularly unsettled both markets and economic forecasts, contributing to a tenuous environment for investors and business leaders alike.