Markets See 'Hardly A Flesh Wound' So Far, But Century's Biggest Trade War Looms, Says Bob Elliott

The tariff war just escalated, and according to Bob Elliott, CIO at Unlimited Funds and former Bridgewater Associates' strategist, we’re staring at trade barriers that will soon surpass the Smoot-Hawley days.

With today’s rollout of 25% levies on Canada and Mexico, plus another 10% on China, more than 40% of planned tariffs are now in place – hitting U.S. consumers and businesses with an estimated $160 billion in added costs, he said on X.

The new admin followed through on its promise to impose 25% levies on CAN and MEX and an additional 10% on China today, bringing the total costs of these new tariffs to an estimated 160bln on US consumers and biz. That marks the implementation of just over 40% of the plans. pic.twitter.com/fTiTGkObrJ
— Bob Elliott (@BobEUnlimited) March 4, 2025

A Trade War Decades In The Making

The new tariffs bring U.S. trade restrictions to their highest level since the 1960s. But that's just the start. If all planned tariffs are implemented, Elliott warns, the U.S. tariff rate will surge past 20%, the highest since pre-WWI.

“Even the implemented tariffs are likely to have a substantial impact, but there are notably more to come,” he notes, pointing to looming country-specific and product-specific levies that will further strain global trade.

Retaliation Is Coming – And The Pain Won't Be One-Sided

So far, the response from trade partners has been "relatively modest", as Elliott puts it, with China targeting another $22 billion in U.S. goods and Canada set to confirm the first phase of its countermeasures. But that restraint may not last.

If Canada and Mexico fully retaliate with tariffs of their own, Elliott estimates U.S. manufacturing could take a 1% GDP hit just from lost exports.

Meanwhile, foreign economies facing disrupted supply chains could experience a severe drag on growth.

Stocks Shrug, But For How Long?

While stocks have occasionally sold off on the incremental news of these policies coming to fruition, global stocks remain just off all time highs.

Hardly a flesh wound given the world is facing the largest trade war in more than a century at a time when trade is 2-3x the size. pic.twitter.com/zQAZbIdDuV
— Bob Elliott (@BobEUnlimited) March 4, 2025

Despite these historic trade tensions, global equities are still hovering near all-time highs – a surprising resilience that Elliott calls into question. “Hardly a flesh wound given the world is facing the largest trade war in more than a century,” he says.

But as the full impact of tariffs unfolds, the industries could see increased volatility: