Stock Market Update:

Wall Street kicked off the week with turbulence following President Trump’s sweeping tariff announcement on Mexico, Canada, and China, fueling fresh trade tensions. Auto stocks are particularly vulnerable, with GM’s shares tumbling 10% last Tuesday, marking one of its worst trading days in recent years. The automaker’s previous optimistic forecast for 2025 did not account for the economic repercussions of these tariffs.

ECONOMY

Trump Initiates Trade Conflict With Key U.S. Allies

Over the weekend, President Trump declared the imposition of hefty tariffs on the nation’s three most significant trade partners: 25% on imports from Mexico and Canada (excluding a 10% levy on Canadian energy products) and 10% on Chinese goods. He framed the move as a countermeasure against the inflow of migrants and narcotics into the U.S. Trump acknowledged that while these tariffs could bring short-term hardships to Americans, they were essential for encouraging Canada to integrate as the 51st U.S. state.

Potential Repercussions

• Set to take effect Tuesday at 12:01 AM ET, these tariffs may cause widespread supply chain disruptions, increased costs for American consumers and businesses, and potentially trigger recessions in both Canada and Mexico, analysts warn.
• Unlike his first administration’s trade policies, which targeted $380 billion in Chinese goods, these new tariffs will impact $1.4 trillion in trade, predominantly affecting U.S. allies.

Industries Facing Higher Prices:

• Automobiles: Cars frequently cross the U.S.-Canada border multiple times before reaching dealerships. According to Wolfe Research, tariffs could add $3,000 to the price of a new vehicle in the U.S.
• Food: Mexico supplies over 80% of the avocados consumed in the U.S., alongside other key produce and meat imports, all of which may see significant price hikes.
• Construction: 25% of U.S. building materials originate from Canada and Mexico, further exacerbating housing affordability concerns.

Retaliation on the Horizon?

• Canada: Prime Minister Justin Trudeau introduced $107 billion in retaliatory duties on U.S. products, affecting goods like beer, apparel, and home appliances.
• Mexico: Officials are preparing proportional countermeasures.
• U.S. Corporate Backlash: The U.S. Chamber of Commerce and the Wall Street Journal have criticized the move, labeling it “The Most Misguided Trade War in History.”

GLOBAL AFFAIRS

Canada’s Response to Tariffs

• Canadians voiced their discontent, with spectators at an Ottawa Senators game jeering the U.S. national anthem.
• Ontario declared a ban on select U.S. liquor imports, including Tito’s Handmade Vodka.
• Trudeau invoked historical alliances, referencing WWII and 9/11, emphasizing Canada’s longstanding support for the U.S.

Uncertainty Surrounding USAID’s Future

• Over the weekend, the U.S. Agency for International Development (USAID) website was unexpectedly taken offline amid turmoil following a 90-day freeze on foreign aid.
• Top security officials within the agency were placed on leave after refusing unauthorized access requests to classified personnel data.
• Elon Musk took to X, branding USAID a “corrupt institution” and advocating for its dissolution.

HEALTH & TECHNOLOGY

Elon Musk Gains Access to Social Security Records

• Treasury Secretary Scott Bessent authorized Elon Musk and his DOGE team to review trillions of dollars in government disbursements, including Social Security and tax refunds.
• Critics express concern over political figures obtaining access to sensitive financial data.
• Musk claims the Treasury Department has never denied fraudulent payments and vowed to eliminate millions in government-funded grants.

HEADLINES

Other Key Developments:

• President Trump dismissed Consumer Financial Protection Bureau (CFPB) director Rohit Chopra, a move that took many by surprise.
• JPMorgan CEO Jamie Dimon downplayed tariff concerns, urging people to “move on.”
• The Chiefs and Eagles will clash in Super Bowl LIX, with Kansas City eyeing a record-setting third consecutive championship.
• January’s jobs report will be published on Friday, with analysts projecting 150,000 new positions.
• Major earnings reports expected this week include Alphabet, Amazon, Disney, and Eli Lilly.
• Trump and Israeli Prime Minister Netanyahu will convene at the White House tomorrow.
• The Critics Choice Awards are set for Friday after a postponement due to LA’s wildfires.