Canada slapped $20 billion in retaliatory tariffs on U.S. goods after trade negotiators walked out last week without a deal. Trump's tariffs take effect anyway. Both countries now get to enjoy the economic equivalent of mutually assured destruction, except instead of nuclear annihilation it's just expensive cheese and lumber.
The retail trader contingent immediately began scanning their portfolios for exposure. They found Canadian ETFs they bought in 2019 and forgot about. They panic-sold at a loss. The Canadian government did not notice or care.
Trade negotiators flew home empty-handed, which means they accomplished exactly what everyone expected them to accomplish. Talks failed. Tariffs activated. Supply chains got more expensive. Some guy in Michigan will pay an extra forty dollars for a refrigerator part and blame his neighbor's political sign.
The technical setup here is irrelevant. Tariffs don't show up on a candlestick chart. Moving averages don't predict trade policy. The 50-day crossed the 200-day and Canada still told us to go f*ck ourselves. Price action doesn't care about your geopolitical thesis.
Somewhere a day trader is drawing trend lines on the USD/CAD pair convinced he's found the pattern that predicts international commerce. He has not. He's found a squiggly line that looks like a head and shoulders if you tilt your screen and squint. His stop loss will trigger during the next volatile session and he'll tweet about manipulation.
Canada and the United States are now in a trade war neither wanted but both deserve. The negotiators will meet again in three months, accomplish nothing, and issue a joint statement about productive dialogue. Until then we all get to pay more for everything while pretending the charts predicted this.
Photo by John McArthur on Unsplash
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