Michael Huber 
We knew President Donald Trump was going to slap Mexico, Canada and China with tariffs. We knew that the Elon Musk meant business with finding waste in government. Did we think it was all a joke? The sellers of the futures Sunday night — and, no doubt, the bailers in Monday’s regular session — must have thought it was one big meant-to-be-broken set of campaign promises. As someone who always took Trump seriously, let me tell you how I sort this all out. First, I am shocked at one portion of this troika of tariffs: I thought China might be hit with not a 10% tariff, or even a 60% tariff, which had been kicked around, but a shutdown where Trump wouldn’t bother to implement higher tariff goods entering the U.S. from China at all. I feared that Trump would decide that if Chinese AI startup DeepSeek existing circumvented U.S. export controls to obtain access to Nvidia’s highest-end AI chips, it didn’t matter if we threw tariffs on them at all. Instead, let’s just cut off all tech to China and see how they did. Considering that alternative, a 10% tariff is a tiny tariff. The Chinese got off very easy in this initial batch of duties, which go into effect Tuesday. Believe me, if Peter Navarro, a trade adviser to Trump who was also involved in Trump’s first presidential go-round, had gotten his way, it wouldn’t have gone down like this. It would have been a much higher tariff and a possible cutoff threat. Now, instead, it is almost as if the president is trying to say, “Let’s get off on the right footing here. We will take the tariffs higher if you keep giving us a hard time, but we want to start low to show you goodwill.” So, to bring it back to Sunday’s futures swoon, if you are selling because of the 10% tariff on China, you are way off base. That’s a sign of friendship from this president, especially given he has said he hopes China can help the U.S. stop the Russia-Ukraine war. Against that backdrop, why not play easy with China and put on a much lower tariff than our lifelong ally, Canada? Any retaliation by China is bluster. As for Canada, what can I say? The Canadians — facing a 25% tariff on all goods except energy resources, which are subject to a 10% duty — are over a barrel. They have no place to ship their landlocked oil except for a small port in Vancouver. It comes here. It’s a feckless tariff, one that I suspect will be negotiated down in short order because I think the president is just making a point that the Canadians are getting too good a deal from the U.S., and he wants to make good showing that tariffs can raise money to shrink the debt. I know, the least logical of the president’s efforts. For its part, Canada has announced retaliatory tariffs on more than $100 billion of U.S. goods . Mexico is serious business. Big trading partner. The president doesn’t seem to care about the inflationary impact from this one, even as it is serious. He wants the Mexican government to know that it must enforce its own borders, especially its southern border. This one is going to be difficult to swallow because the U.S. and Mexican economies are so intertwined. The president wants Mexico to stop exporting into the U.S. anything that originally comes from China. Some Chinese steel goes through Mexico then into our country, in an effort to evade tariffs on the metal. It would have been better if he had just banned steel from Mexico. Much more efficient. But this tariff is about making good on his promise of creating a real border, one that’s not friendly with Mexico unless the country’s government steps up efforts to halt illegal immigration into the U.S., as well as the flow of drugs such as fentanyl. He knows that a border that’s enforced from one side and not both is one that won’t work. The tariff is a blunt instrument that might be ill-advised because Mexican President Claudia Sheinbaum has a pretty strong mandate to play hardball. It’s the only real wild card in this three card monte of a night. But let’s remember that our president is transactional. He likes to deal. The 10% tariff on Chinese imports goes up if Beijing does not play ball. The 25% tariffs on Mexican and Canadian imports goes down or disappear if the respective governments play ball, if only we really knew what playing ball meant. Let’s hope Trump knows. Musk and his Department of Government Efficiency also is in the news this weekend for a situation involving the U.S. Agency for International Development . As far as Musk’s DOGE efforts go, did people think he was just going to go away in frustration? Did people think it was a sham? What about Musk would make someone think it was a charade? Still, as of yet, DOGE has not gone after Social Security and Medicare, which account for a significant share of U.S. government spending. Cutting spending around the edges is unlikely to bring long-term interest rates down the way that those who fear growing deficits hope to see. Bottom line I know many are tempted to sell on the tariff developments, especially those who didn’t sell Friday as these duties were bandied about all day . Look, I am never sanguine about futures indicating declines of 2% or more, which is what we’re seeing Sunday night with the Nasdaq. And I hear the president when he says he doesn’t care about the market’s reaction, as he did Friday after the bell. Ultimately, though, Trump does care about the performance of the U.S. stock market, which is why I think that these are all shots across the bow to be sorted out to the benefit of the markets. So, sit tight. If you have cash, perhaps buy something that you want in the defensive categories. Many of the pharmaceutical companies report earnings this week. I like Club name Bristol Myers Squibb . Don’t forget last week Apple reported a good number . I wish I could say Amazon or Alphabet were right to nibble on, but those Club stocks have run so much and aren’t all that defensive. If you really want to go out on a limb, try Nucor , which is in the Club’s Bullpen watchlist . The North Carolina-based steelmaker could be the real winner in a world where Chinese steel will be tariffed for certain. To me, I will be all eyes and ears about what to buy. Is this our chance to get into Texas Roadhouse that I talked about during our January Monthly Meeting ? It might be. We will let you know beforehand, as always. One last point: Selling below 2% is pure panic. I just wish we were oversold, according to the S & P Short Range Oscillator, my trusted momentum indicator. Instead, we just ended a six-session streak of being overbought on Friday. It would be a heck of a lot easier if we were oversold, wouldn’t it? (Jim Cramer’s Charitable Trust is long NVDA, AAPL, AMZN, GOOGL, BMY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
We knew President Donald Trump was going to slap Mexico, Canada and China with tariffs. We knew that the Elon Musk meant business with finding waste in government. Did we think it was all a joke? The sellers of the futures Sunday night — and, no doubt, the bailers in Monday’s regular session — must have thought it was one big meant-to-be-broken set of campaign promises.
As someone who always took Trump seriously, let me tell you how I sort this all out.
