Another Day of Tariffs-Related Selling — Evening Brief – 03.11.25
The new presidential term has stumbled out of the gate, casting a shadow over the economic outlook, primarily due to aggressive tariff proposals that threaten to ignite a global trade war. On Tuesday, President Trump doubled the planned tariff on all steel and aluminum imports from Canada, elevating it to 50%, in direct response to Ontario’s decision to impose a 25% tariff on electricity exports to the U.S. Late in the day, however, Canada reversed its decision while the U.S. has not yet responded.. The initial announcement ignited another tidal wave like selling in the equity markets, with the major indices shedding another 1.5% to 2%.
What’s particularly striking is that much of the fallout to date stems from self-inflicted wounds. Policy-driven shocks of this magnitude are uncommon without external provocation, yet President Trump’s boundary-breaking approach is carving out a fresh—and disruptive—precedent in economic governance.
To give credit where it’s due, most data released so far continues to tilt reassuringly toward U.S. growth. However, Trump’s tariff proposals could upend the steadily growing economy he took over on January 20. Economic reports, by their nature, lag real-time developments to some extent—a limitation that might now be magnified to an unprecedented degree.
For now, it’s fair to contend that a steady tailwind continues to propel U.S. economic activity. The Dallas Fed’s Weekly Economic Index (WEI) reflects moderate growth consistent with recent trends. “The WEI stands at 2.24%, aligned with four-quarter GDP growth, for the week ending March 1, and 2.43% for February 22,” according to the regional Fed bank. “Its 13-week moving average is 2.46%, compared to 2.51% four-quarter GDP growth through Q4 2024.”
The WEI suggests that economic activity is holding steady, maintaining a consistent rhythm for the time being. However, the narrative emerging from headlines paints a sharply divergent picture of unease. The critical issue now is whether the rising tide of uncertainty and worry over Trump’s tariff plans will start to erode growth in the weeks and months ahead.