Trump Threatens 35% Canada Tariff; Dimon Warns of Tariff Complacency

Trade Tensions and Tariffs - President Trump's threat of a 35% tariff on some Canadian goods and a baseline of 15-20% on other countries is causing market volatility [1][2] - China criticizes the U S over its trade policies, accusing Washington of abusing tariffs [1] - Markets appear relatively relaxed despite tariff headlines, with the S&P 500 pointing lower by two-tenths of 1% [2][3] - A 35% tariff on Canada may not be as impactful as it seems, as much of the trade is covered by the USMCA [5][10] - The market may be becoming desensitized or complacent to the massive number of tariff headlines [6] - A baseline tariff of 20% would effectively double the economic damage expected by markets and economists [14] Market Sentiment and Risk Assessment - Jamie Dimon warns that markets are complacent on Trump's tariff agenda [1][18] - Implied volatility is low, suggesting the market is not pricing in risk from extreme volatility [7] - The market's ability to "buy the dip" after sell-offs is a conundrum for investors [8][9] - Equity markets may be trading off of earnings outlook and inflation data rather than tariff threats [20][21] Federal Reserve and Inflation - The Federal Reserve (FED) officials are divided on how the tariff impact shows up and how long it will persist [27] - Jamie Dimon anticipates firmer inflation due to tariffs, giving the FED a 40-50% chance of hiking [22][23] - The FED minutes solidify that most FED members are worried about persistent inflation from tariffs [27] Geopolitical Implications - China opposes unilateral tariffs and believes ASEAN countries will resist unilateralism [32][33] - China is willing to work with Vietnam to safeguard the legitimate interests of all countries [34] - The U S and China are vying for influence in Southeast Asia [36]