| For a brief moment, it looked like Wall Street’s worst fears about President Donald Trump’s tariff plans were misplaced — and a relief rally started rippling through markets. Then, as he stood in the White House Rose Garden Wednesday soon after 4 p.m., pointing to an oversized placard with the levies he’s slapping on imports from the US’s trading partners, the reality set in: He was significantly ratcheting up his trade war, just as he said he would. The market impact was rapid — and painful. US equity futures sank as investors braced for the impact on corporate earnings. European stocks slid, following Asian equities lower. A gauge of the dollar tumbled to a five-month low as analysts warned about the hit to the US economy, with the greenback losing more than 1% versus both the euro and yen. Treasury yields fell toward the closely-watched 4% level, their lowest since October, with European peers following as traders plowed cash into havens. “Let’s not beat around the bush, the situation is really not good,” said Nicolas Forest, the Brussels-based chief investment officer at Candriam. “Until the last minute, investors were living in the hope that the trade policy would end up to be reasonable and pro-business and that it would avoid the risk of a recession. Investors thought Trump would back down.” It’s worth noting that, as always, markets began pricing in the event long before it happened. Trump campaigned last year on a promise of tariffs, and he had been teasing yesterday’s specific announcement for two weeks. The S&P 500 is already down 7.7% from its Feb. 19 record. So, some investors are already wondering when stocks will turn higher. Steve Chiavarone, head of the multi-asset group at Federated Hermes, says that if yesterday’s announcement represents the most draconian levels of tariffs, and countries now negotiate reductions to these rates, that could be good for markets. “This may create enough of a sell-off over the next day or so that it creates a buying opportunity,’’ he said yesterday after the announcement. “Worst-case scenario today would’ve been at a low rate with threats of escalation. I’d rather, at this point, have higher rates with the potential to deescalate.” —Liz Capo McCormick and Carmen Reinicke Trade wars, tariff threats and logistics shocks are upending businesses and spreading volatility. Understand the new order of global commerce with the Supply Lines newsletter. | 
