By Chad Roope, CFA ®, Chief Investment Officer U.S. tariffs set to be imposed on imports from Canada, China, and Mexico – ranging from 10% to 25% – and suggestions of forthcoming tariffs on the European Union mark a sharp escalation in trade protectionism. This shows that tariffs will be a key policy tool for the new U.S. administration, as telegraphed during the presidential campaign. The effective rate of U.S. tariffs will be close to 1930s levels if fully implemented. The 10% tariffs could be the new baseline for the U.S. to earn tax revenue, while 25% may prove to be used more as leverage in negotiations – as seen in the decision to delay tariffs on Mexico for a month. But uncertainty is high. What’s key for markets is how long 25% tariffs last: the longer they hold, the more permanent the supply chain shifts. Legal challenges could delay implementation and add to market volatility. How countries retaliate is also important – and could draw further U.S. escalation. These actions – and their ripple effects – could dent corporate and investor confidence. The broader economic implications could be more significant than the direct effects. Prolonged tariffs, as proposed, could hurt growth and add to inflation. We already thought loose fiscal policy and supply constraints – like an aging workforce – would keep inflation above the Federal Reserve’s 2% target. That leaves the Fed limited flexibility if gr