US Launches Trade War with the World

While most Americans quietly enjoy their daily lives, President Trump is creating a big surprise for 2025 – a global trade war.

The news media is picking up in the weight of the 25% tariffs on Canada and Mexico and how Trump is threatening a severe response to any matching of his tariffs. Trump’s message is to take it and live with it continuously without complaint.  Worse, he’s gone back on his word that Canada only has to improve its border, illegal drug activity and military investment. Canada complied quickly only to be told by Trump that it doesn’t matter — the tariffs are happening.

Canadian governments aren’t backing down and condemning Trump’s decisions. Canada’s Prime Minister Justin Trudeau just announced counter-tariffs on hundreds of billions of dollars of US imports. The two countries trade trillions of dollars in goods and services, and they’re all threatened at this point. The full fallout of this trade war is hard to imagine or calculate. All the chips are on the table with Trump believing there is no way his side will avoid terrible losses.

This failure in trade could result in his being ousted as President.

And we wonder with Trump digging his heels in whether a truce or renegotiation is possible. Do investors feel its possible?  We’ll find out this week.

Hedge Fund Managers Believe a Stock Market Crash is Imminent

It appears some hedge fund managers are betting on a stock market collapse.

Throughout January, investors placed 10 times more bets on American stocks falling than on their continued rise, a staggering shift that reflects growing unease over Wall Street’s future under Trump’s leadership. — dailymail.co.uk report

Reported data from Goldman Sachs shows a dramatic surge in ‘short’ positions against US stocks – meaning they expect the US stock market is headed for a precipitous crash. As more hedge fund managers and retail investors get wind of this trend, it could spread like wildfire for a self-fulfilling prophecy.

The Wall Street Journal reports tonight, that futures linked to the tech-heavy Nasdaq Composite led the declines, falling by more than 2%, while the S&P 500 slipped by 1.6%. Dow Jones Industrial Average futures slid by about 1.1%, or around 500 points. Of course, futures don’t always predict a Monday morning collapse.

Speaking of Prophecies, Black Swan Author Nassim Talib expects this collapse will be three times worse than the DeepSeek drop.  He attributes the coming collapse to people adjusting to reality, and Americans may not fully appreciate the full context of what’s taking place. He reminded viewers that the US stock market is heavily weighted toward the Mag7 stocks who are heavily invested in the AI infrastructure play, which could conceivably flop. Those companies are quiet and in a panic about the China upstart’s cheap LLM.

Any futher news from DeepSeek at this point could generate tremendous damage to Trump and the US tech sector. If Europe takes a big interest in DeepSeek’s DeepThink R1 LLM to understand if it can be redeveloped to compete with OpenAI or Google’s AI LLM, it can make investors very nervous.

Many top hedge fund managers and investment gurus are all in on Nvidia, Palantir and the AI stocks, which have been the best technology stocks to own.

And Americans have been transfixed on the battle between Trump and the Woke Pro-China leaders in the last 10 years. And that battle, as you might see with President Trump’s mental condition, carries exhaustion, opposition, excessive spending and debt, and a limited ability to adjust manufacturing, production, shipping and supply chains quickly.

Reality must come in at some point which is what Talib’s message is. The Black Swan event crystalizes the negative potential.

Canada’s Awakening National Independence and a New Global Outlook

Canada is no different. It’s been sleeping through a period of American financial and regulatory fog that had to end at some point. The US is so heavily indebted that even Trump’s Pro-American plan may not work. Their debt payment emergency is coming up.

The net effect emerging now is for Canadians to look beyond the small-minded connection with exports to the US, to view Canada’s potential to sell to the world.  For the US, it could result in a stock market crash. The tariffs add to the predictions by some of a market correction of up to 15% this year.

The situation with US technology stocks too, worsens. China’s DeepSeek V3 AI assistant and Open Source LLM are making investors question investments in OpenAI, Nvidia, ASML, Google, Microsoft, and other major tech companies.

This is a major development given how the US is putting all its cards on its dominance and control of AI.

What’s forming here is an increasing sympathy and common interest between the US’s trade partners who may unleash a painful response to Trump and Americans – that trade wars with everyone won’t go well.

The US government is covetous of Canada’s crude oil, natural gas, potash, and aluminum. And if the US housing rebirth is to occur, it will likely need steel, aluminum, crude oil and Canadian softwood, something it’s been tariffing for a long time.

The 25% tariff decision is in defiance of a still active USMCA deal, which was renegotiated by Donald Trump in his first term. Mexico and China are being tariffed as well, and Trump has made new threats to the EU. Add these to restrictions applied to evil BRIC countries, and you have a world tied up in knots. How could this result in anything but a stock market crash?

See more on the stock market forecast and which stocks might be the best to buy. The TSX is definitely not a good investment currently, but you might want to avoid all US technology stocks.

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