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Suddenly, tacos are back on the menu. The latest fronts this week in U.S. President Donald Trump’s crusade against trade barely garnered a yawn from markets. Are investors right to bet that on the worst of his trade threats, “Trump Always Chickens Out”? We’ll dig into that after the news:
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Internal trade: Ottawa launches red tape review, looking to scrap outdated regulations
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- Yesterday Nvidia briefly became the first company to hit US$4-trillion in market value
- Today Aritzia Inc.
is scheduled to release its 2026 first-quarter earnings along with Cintas Corp. and Delta Air Lines Inc.
- Tomorrow Statistics Canada releases June jobs numbers
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A sign reading "Cluck Cluck TACO" outside the White House on June 17, 2025. Kevin Mohatt/Reuters
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Who’s afraid of a global trade war? Not investors, for the moment
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Good morning, this is Jason Kirby, economics reporter with The Globe and Mail, back in the Business Brief chair.
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Let’s quickly recap the past couple of days:
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- Monday: With Trump’s 90-deals-in-90-days deadline for trade agreements falling short by (checks Truth Social) 88 big, beautiful deals, Trump set a new Aug. 1 deadline and threatened more than a dozen countries – including Japan and South Korea – with tariffs between 25 and 40 per cent.
- Tuesday: Trump took aim at imports of copper, with 50-per cent tariffs (twice the expected rate) and and threatened pharmaceutical companies with an astonishing tariff rate of 200 per cent.
- Wednesday
: Trump announced tariffs of up to 30 per cent on seven more smaller countries, including the Philippines, unless deals are reached by Aug. 1
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If this were, say, March or April, a volley of headlines like that would have sent panicked investors to check their tumbling brokerage balances.
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But the S&P 500 is just 0.4 per cent lower than it was before the July 4 long weekend and just shy of the benchmark index’s all-time high.
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It’s clear markets don’t believe Trump’s tariff threats will become reality. This is the so-called TACO trade, a notion that’s been widely embraced on Wall Street and boils the President’s orange-hued skin. The Aug. 1 deadline extension, which Trump claimed Monday was a “clarification” and not a “change,” only bolstered investors’ resolve.
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In one regard, the TACO trade is alive and well. It’s expressly because investors have come to rely on the waffler-in-chief to back away from his most outlandish tariff policies that his pronouncements this week barely registered with investors.
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But implicitly the TACO trade only works if there’s something to spook Trump into conciliation. Earlier this year cratering stock prices and soaring bond yields did the trick.
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A market that sleepwalks through tariff threats to near-record highs is hardly a deterrent.
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What Trump wants, Trump gets
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But even this understates the threat the global economy faces.
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Trump calls himself Tariff Man for a reason. He deeply believes that putting up walls around the American economy will make it great again, regardless of all the economic and historical evidence to the contrary.
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The first two trade deals the Trump administration has signed, with Britain and Vietnam, hint at what’s coming.
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The latter in particular will see most goods imported from the southeast Asian country incur a 20-per-cent duty. That’s 20 per cent on a vast swath of the children’s clothes, toys, sporting goods and home furnishings sold in the U.S.
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If the new Aug. 1 deadline for America’s reciprocal duties holds, the new rates, on top of the 20-per-cent tariff on Vietnamese goods, would push the effective U.S. tariff rate to 17 per cent, according to a note from Bank of Montreal senior economist Sal Guatieri.
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Sure, he wrote, that’s down from an estimated tariff rate of 26 per cent in early May, before Trump announced his initial 90-day pause, “but high enough to do some harm to the U.S. economy.”
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