Trade risks are set to dominate financial markets in the coming weeks as the United States heads toward tariff deadlines set by the Trump administration, according to analysts at Canadian Imperial Bank of Commerce.

Equity markets are “quite vulnerable” to a correction, strategists Ian de Verteuil and Will Stevenson said in a report to investors. “While the economic numbers are still reasonable in the United States and the deregulation efforts are favourable, the tremendous uncertainty facing (even) U.S. business warrants caution.”

U.S. President Donald Trump signed an order last month to put 25 per cent tariffs on most Canadian and Mexican goods, with a lower levy of 10 per cent on Canadian energy. Those would take effect at 12:01 a.m. New York time on Tuesday unless the White House decides to defer them again.

The administration has also laid out plans to put 25 per cent tariffs on imports of foreign steel and aluminum on March 12, and Trump has talked about placing levies on cars, copper, lumber and other goods.

“The trade rhetoric coming out of Mar-a-Lago and the preparedness to ignore existing, previously agreed-upon trade deals cast a pall over all international trade relationships with America and its allies,” de Verteuil and Stevenson wrote.

“The reality is the days of allies trusting trade deals with the U.S. are probably behind us,” they added. Deals now in effect, such as the U.S.-Mexico-Canada agreement that Trump signed in 2020, are not “worth the paper it was written on.”

Trump and his officials have given a variety of reasons for their tariff plans — creating leverage to force Mexico and Canada to strengthen border security, reducing the size of U.S. trade deficits and generating revenue to help the administration pay for tax cuts.

The CIBC analysts said they believed tariffs were coming, “but the speed and variety of threats on an almost daily basis have exceeded our expectations. The lack of clarity is a significant risk to the equity market and the economy generally.”

The S&P 500 is up nearly three per cent since Trump’s election.

Trump has also said he plans to apply “reciprocal tariffs” against trade partners, based on the level of tariffs and other barriers those countries have against U.S. products, as soon as April — an idea the CIBC analysts called “quite idiotic.” The complexity of international trade likely makes reciprocal tariffs unworkable, they said.

Bloomberg.com