Live: Trump Enforces Tariffs on China, Temporarily Suspends Duties on Canada and Mexico

As tariffs continue to influence economic forecasts, Wall Street firms are revising their expectations for Federal Reserve rate cuts this year. Morgan Stanley has downgraded its forecast, now expecting just one 25 basis point rate cut, down from the two cuts it previously anticipated. Analysts at the firm explained that the accelerated pace of tariff implementation could result in higher inflation, which would put a halt to any disinflationary trends and delay potential rate cuts in the near term.

Additionally, market experts are now anticipating a further increase in U.S. tariffs on Chinese goods. The prospect of additional tariff hikes has raised concerns about the broader economic impact, making it less likely that the Fed will take immediate action on lowering rates.

Despite the intense focus on President Donald Trump’s tariff plans, which have stirred investor concerns and led to some market volatility in recent days, the broader stock market has shown resilience, indicating that the upward trend for stocks may still be on track.

While the news surrounding tariffs has caused some unease and temporary swings in stock prices, equity strategists remain optimistic. Since the AI-driven sell-off that rattled markets last Monday, the S&P 500 (^GSPC) has actually gained about 0.3%. Even with some significant dips, especially in premarket trading, the index experienced only minimal losses, dipping less than 1% on both Friday and Monday despite heavy speculation about tariffs.

These signs of market stability suggest that, even with the uncertainty surrounding trade policies, investors are maintaining a bullish outlook on stocks.

Fast-fashion platforms like Temu and Shein are facing a major challenge as President Trump’s new tariffs close a loophole that has given them a competitive advantage. The U.S. government has decided to end the de minimis exemption, which previously allowed imported goods valued under $800 to enter the country without tariffs.

This exemption has been a significant factor in the explosive growth of Chinese-based online retailers, enabling them to ship a wide range of products—from discounted fashion to electronics—directly to U.S. consumers without incurring duties.

The surge in their growth was accelerated by a 2016 policy change that raised the duty-free limit from $200 to $800. As a result, the volume of duty-free shipments entering the U.S. skyrocketed, increasing from 139 million in 2015 to a projected 1.36 billion by 2024, now making up about 90% of total imports, as reported by U.S. Customs and Border Protection.

This rapid influx of goods has drawn criticism from American manufacturers and retailers, who believe the exemption allows foreign companies an unfair advantage. In response, Amazon (AMZN) has tried to compete by developing its own marketplace for direct shipments from China, but the effort has been met with mixed reactions.

U.S. stocks ended the day on a positive note Tuesday, despite the implementation of a new 10% tariff on Chinese goods, with China retaliating in kind.

The Dow Jones Industrial Average (^DJI) edged up by around 0.3%, while the S&P 500 (^GSPC) climbed approximately 0.7%. The Nasdaq Composite (^IXIC) experienced a notable rally of nearly 1.4%, making up for some of the losses from the previous day. The U.S. dollar index (DX-Y.NYB) dropped 0.9%, as investor anxiety diminished.

Although President Trump did not engage in talks with Chinese President Xi Jinping on Tuesday, a conversation is expected later in the week.

Along with the tariff reprisals, China launched an investigation into Google (GOOG, GOOGL) for antitrust concerns and added U.S. companies PVH (owner of Calvin Klein) and Illumina (ILMN) to its list of “unreliable entities.”

A last-minute agreement has temporarily alleviated fears of a U.S.-Canada trade war, offering a brief moment of relief for investors. However, Canadian leaders are expressing deep concerns about the crucial negotiations set to take place in the coming weeks.

The deal only postponed the tariff threat for 30 days, with President Trump indicating that the next month would be used to determine if a comprehensive economic agreement with Canada can be established.

As long as the potential for tariffs remains, Canadian economists, business leaders, and government officials are increasingly worried that the looming uncertainty could drive investments away to the U.S.

David Eby, Premier of British Columbia, strongly criticized Trump's tactics, suggesting they were intentionally aimed at weakening Canada's economy and pushing the country toward becoming part of the U.S. “It’s a strategy that is both harmful and confusing,” Eby stated, calling the situation “profoundly upsetting” and sparking anger among Canadians who feel they understand the underlying motives of the negotiations.

President Donald Trump downplayed the impact of China’s retaliatory tariffs on Tuesday, stating that the situation was "fine" and adding that he’s not rushing into talks with Chinese President Xi Jinping to address the ongoing trade tensions.

"We'll talk to him when it's the right time. No hurry," Trump told reporters, contradicting his earlier remarks that he expected to speak with Xi within the next 24 hours. He also avoided speculating on whether future discussions might lead to the removal of tariffs.

The president made these comments after signing new executive orders, following the implementation of a 10% tariff on Chinese goods. In retaliation, China has launched a series of countermeasures, including the potential investigation of companies like Google (GOOG, GOOGL) and Nvidia (NVDA), which could be used as leverage.

Meanwhile, Trump’s proposed 25% tariffs on goods from Canada and Mexico are delayed for a month as talks continue. He also highlighted the positive outcomes from ongoing negotiations, noting the temporary border closure and reinforcing his belief that tariffs are an effective negotiating tool, saying, “We’re making progress with countries that were unexpected.”