Tariffs Loom: How Trump’s Trade Threats Are Shaking Markets

Last Week: Trump’s Back, and So Are the Tariff Threats

Well, folks, last week was quite the show. Donald Trump was inaugurated—again—and the markets were on edge like a cat in a room full of rocking chairs. But guess what? No tariffs on day one! Instead, Trump gave us a new date: February 1st. It’s like waiting for the next season of your favorite show, except this one is called “Tariffs: The Revenge of the Trade Wars.”

Markets spent the week trying to figure out if Trump was bluffing or just really into suspense. Spoiler alert: he’s probably not bluffing. Canada, Mexico, China, the EU, and Russia are all on his hit list. It’s like The Avengers, but instead of superheroes, it’s just a bunch of countries getting slapped with import taxes. And let’s be honest, the only thing getting smashed here is global trade.

But hey, it wasn’t all doom and gloom. Europe’s PMIs came in better than expected, and the Bank of Japan decided to hike rates. Yes, you heard that right—Japan actually raised rates. I know, I was shocked too. It’s like finding out your grandma has a secret TikTok account.

Central Banks: The Real MVPs

While Trump was busy tweeting, central banks were doing the heavy lifting. The Riksbank, BoC, ECB, SARB, and NBN all have rate decisions coming up next week. But the real star of the show? The Fed. They’re expected to hold rates, which means the dollar might finally stop its freefall. But don’t get too excited—Powell isn’t going to say much. He’s like that friend who texts “K” instead of “OK.” Minimal effort, maximum frustration.

Meanwhile, the Riksbank is expected to cut rates because, well, inflation in Sweden is softer than a marshmallow in a sauna. And the BoC? They’re slowing down their rate cuts, but not stopping. It’s like when you’re on a diet and decide to have just one slice of pizza. Sure, you’re slowing down, but let’s be real—you’re not stopping.

Next Week: Buckle Up, Buttercup

Alright, let’s talk about next week. If last week was the calm before the storm, next week is the storm. And not just any storm—a Category 5 hurricane of economic data and central bank decisions. Here’s what you need to know:

1. Riksbank: They’re expected to cut rates by 25bps. Inflation is softer than a baby’s bottom, so they’ve got no choice. But don’t worry, Sweden—your krona is still stronger than the euro, so you’ve got that going for you.
2. BoC: They’re expected to cut rates by 25bps too, but they’re slowing down. It’s like when you’re running late for work and decide to speed up, but then you see a cop and suddenly remember you’re a law-abiding citizen. Slow and steady wins the race, right?
3. Fed: They’re expected to hold rates, which is like hitting the pause button on a Netflix show. You know you’re going to keep watching, but you just need a snack break. Powell will probably give us his usual “we’re monitoring the situation” speech, which is code for “we have no idea what’s going on either.”
4. ECB: They’re expected to cut rates by 25bps, but don’t expect any fireworks. Lagarde is about as exciting as a bowl of plain oatmeal. She’s not going to give us any meaningful guidance, so don’t hold your breath.

The Elephant in the Room: Tariffs

Now, let’s talk about the elephant in the room—tariffs. Trump has been threatening them for weeks, and February 1st is D-Day. If he follows through, it’s going to be a mess. Prices will go up, growth will slow down, and central banks will have to figure out how to deal with the fallout. It’s like when you accidentally set off the fire alarm while cooking dinner—chaos ensues, and everyone’s scrambling to figure out what to do next.

But here’s the thing: markets are acting like tariffs aren’t going to happen. It’s like when you ignore your dentist’s advice to floss and then act surprised when you get a cavity. Spoiler alert: it’s going to hurt.

Final Thoughts: The Week Ahead

So, what can we expect next week? A lot of central bank decisions, a lot of economic data, and a lot of uncertainty. The dollar might get a boost from the Fed holding rates, but don’t expect a full recovery. The euro? It’s probably going to take a hit, especially if the ECB cuts rates. And the Canadian dollar? Well, let’s just say it’s not looking great.

But hey, that’s the beauty of the financial markets—there’s always something to keep us on our toes. Whether it’s Trump’s tariffs, central bank decisions, or just plain old economic data, there’s never a dull moment. So grab your coffee, buckle up, and get ready for another wild week in the world of finance.

And remember, folks:
In the words of the great Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful.” Or, in our words: “Don’t panic, but maybe keep a bottle of wine handy—just in case.”

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