Trump's tariffs roil U.S. markets. And that's the reaction that matters

Canada can huff, and puff, but if anything's going to blow down Donald Trump's house of tariffs it's going to be the reaction within the United States.

And there are signs of pushback.

The stock market is turning, economic sentiment is nosediving, the U.S. president's approval is receding, and American lawyers are preparing lawsuits.

Those factors will likely pack more punch in Washington than the $155 billion in counter-tariffs threatened by Canada. To put this number in perspective, it's a fraction of what American stock markets have lost this week.

The president caused an instant swoon with several simple words: "The tariffs — they're all set," Trump said on Monday, confirming a 25 per cent duty on most products was coming today, and that there was nothing Canada and Mexico could say to dissuade him.

Markets replied by quickly wiping out their entire gains for 2025, with the S&P 500 losing 1.76 per cent on the day, triggering hundreds of billions in losses in what Bloomberg's evening newsletter called, "the Trump sell-off." The drop continued Tuesday morning, with stocks further declining after the opening bell.

After Trump spoke, the index turned negative for the year. Minutes later, the host on Trump's favourite network, Fox News's Martha MacCallum said the market was "freaking out a bit."

But that modest single-day decline of nearly two percentage points, and five-point drop month-to-month, is by no means the only grey cloud on the economic horizon.

U.S. consumer confidence has had its sharpest monthly drop since the pandemic in February. Spending is down. The Atlanta Federal Reserve's forecast for this quarter has collapsed into negative territory, raising the heretofore unthinkable possibility of a GDP contraction.

Meanwhile, his own political honeymoon is in doubt. Trump had enjoyed some of the best approval numbers of his career, but they are ticking down and sliding underwater, meaning the point where they're below his disapproval level.

"You're getting a negative vibe," said Gary Hufbauer, a longtime trade-watcher at the pro-market Peterson Institute for International Economics.

The premier of Canada's most populous province was doing everything in his power Monday to fan the flames of economic fear in the U.S.

Ontario's Doug Ford was on NBC threatening to shut off electricity exports to the U.S., and minerals for manufacturing, and provincial contracts for U.S. companies — prompting the host to ask whether he's been discussing this with the prime minister.

Ford said he had.