This has been going on for quite a while.
Some of the earliest recorded tariffs date back to 3000 BCE in the region of modern-day Turkey, where trade in metals and wool between the city of Kanesh and Assyria was taxed.
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Greece, Egypt and the Roman Empire all got in on the act, using tariffs to manage the flow of goods, protect local industries, and generate income for the state.
The first American tariff dates back to George Washington, the first American president, in response to an urgent need for revenue and a trade imbalance with England.
Tariffs were the greatest source of federal revenue until the federal income tax began after 1913. For well over a century the federal government was largely financed by tariffs averaging about 20% on foreign imports.
Which brings us to today and President Donald Trump’s announced tariffs on Mexico, Canada and China, which were scheduled to take effect on Feb. 4, in response to what he calls the “extraordinary threat” posed by “illegal aliens and drugs.”
Related: 12 things to know about Trump’s new tariffs
Canadian Prime Minister Justin Trudeau said his country would implement a 25% tariff against $155 billion of U.S. goods in retaliation for Trump’s tariffs, while Mexico said it would impose retaliatory tariffs, without mentioning any rate or products.
China has said it would challenge the tariffs at the World Trade Organization.
U.S. President Donald Trump said he would pause the tariffs on Mexico for one month.
Andrew Harnik/Getty Images
Stock market reacts to tariff news
Analysts were concerned that the tariffs could create uncertainty in the market and Trump warned that Americans could feel “some pain” from the emerging trade war. Economists say that many companies will simply pass the tariffs on to consumers, increasing inflation.
Stocks initially tumbled on Feb. 3 but pared the losses after Trump said he would pause the tariffs on goods imported from Mexico for one month.
After negotiations, Claudia Sheinbaum, the country’s president, agreed to send 10,000 soldiers to the U.S. border to prevent drug trafficking.
And Canadian Prime Minister Justin Trudeau said Trump would delay the tariffs for 30 days after the premier pledged to further cooperate on border security.
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Trump said the soldiers “will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country.”
The U.S. and Mexico plan talks; participants include Secretary of State Marco Rubio, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick as well as “high-level Representatives of Mexico,” he said.
“I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries,” Trump added.
“We had a good conversation with President Trump with great respect for our relationship and sovereignty; we reached a series of agreements,” Sheinbaum said on X. “The United States is committed to working to prevent the trafficking of high-powered weapons to Mexico.”
Sheinbaum added that “our teams will begin working today on two fronts: security and trade.”
‘Permanent tariffs will not be a thing’: Analyst
While fentanyl has been touted as a major issue in trade negotiations, data from the U.S. Customs and Border Protection and other federal agencies show the vast majority of the drug comes through legal ports of entry, and the people bringing it into the country are native-born Americans, KPBS of San Diego reported in August,.
Thierry Wizman, global foreign-exchange and rates analyst at Macquarie, expressed some doubts about the tariffs.
“Call us deluded, but we still think that permanent tariffs on the US’s allies (Canada, Mexico) will not be a thing,” Wizman said in a research note. “That’s because concessions are an ‘easier’ way to deal with Trump’s ‘problems’ (from a cost-benefit and game-theoretic perspective), and Trump likes to make ‘deals.’”
Wizman also said that political and market pressure would weigh on the parties to make concessions, as in 2018 when Trump unilaterally announced his intention to impose tariffs on all imports from Mexico “until such time as illegal migrants coming through Mexico, and into our Country, STOP.”
Fund manager adds protection to portfolio
The move was seen as threatening the ratification of the U.S.-Mexico-Canada Agreement, the North American trade deal set to replace the North American Free Trade Agreement. The tariffs were averted on after negotiations.
Chris Versace is taking no chances. The lead manager of the TheStreet Pro Portfolio detailed his plans in light of all the tariff talk.
The veteran fund manager said he was adding protection for the TheStreet Pro Portfolio in the form of two market inverse ETFs. These are bets against the expected daily performance of an asset or market index and offer investors a way to profit from or hedge against market declines.
“While the market trades higher following a better-than-feared outcome with Mexico, we will continue to hold our newly added inverse ETFs at least until we have a clearer sense of the tariff situation with Canada, China and the European Union,” Versace said in a follow-up column. (Trump has said tariffs on the EU countries are in the offing.)
Related: Goldman Sachs analysts warn on Trump tariff impact for stocks
First, he was buying 1,830 shares of the ProShares Short S&P500 ETF (SH) , a market-cap-weighted index of 500 U.S. operating companies and real estate investment trusts, at or near $42.15.
Versace is also buying 2,060 shares of ProShares Short QQQ ETF (PSQ) , which tracks the inverse performance of the Nasdaq 100 Index, at or near $37.45.
Following the trades, each fund will account for roughly 1.5% of the portfolio’s holdings.
“We see these two holdings helping insulate the portfolio from near-term volatility without sacrificing its exposure to quality companies in what is likely to be a reactionary and turbulent market environment,” Versace said.
While he hoped the portfolio won’t hold these two positions for more than a short period, Versace said the duration will hinge on several factors, including the market’s technical setup, its relative strength index, and oscillator levels, as well as trade and tariff negotiations.
“When we do remove SH and PSQ shares from the portfolio, if we find compelling opportunities, we will put the returned capital to work. And if not, we’ll build back up our cash until they do,” he said.
Versace said portfolio members who cannot add these two funds to their holdings because of their trading platforms, or who “are risk averse to this potentially short-term trade, we would suggest sitting on the sidelines and waiting to put cash to work.”
Related: Veteran fund manager issues dire S&P 500 warning for 2025
