For this week's Sunday Editorial, we take a look at Tariffs, which are back... and ao are the aconomic jitters.

Just when we thought the market had settled into a comfortable rhythm, here comes another plot twist—tariffs are back in full force, and Wall Street isn’t thrilled. Over the weekend, President Trump signed an executive order slapping new tariffs on Canada, Mexico, and China, throwing another wrench into the gears of global trade. The numbers? A hefty 25% on goods from Canada and Mexico, and 10% on Chinese imports. Oh, and just to make things more interesting, there’s also a 10% tariff on Canadian energy imports.

Now, let’s be real—tariffs aren’t just a bunch of numbers on a government document. They hit where it hurts: consumer prices, business profits, and investment portfolios. And while some might argue this is just the latest move in Trump’s long-running economic chess game, the market isn’t buying it. The S&P 500 is already on edge, inflation worries are creeping back in, and investors are bracing for impact.

The market has been playing nice with Trump so far, but these new tariffs might push it over the edge. Investors were already skittish about inflation, and now we’re looking at higher costs across the board. Goldman Sachs predicts these tariffs could bump core inflation by 0.7%—not exactly what the Federal Reserve wants to see as it tries to figure out whether to cut interest rates. And let’s not forget that the Fed just hit the pause button on rate cuts, saying they wanted to “see what policies are enacted” under Trump’s new term. Well, now they’ve got their answer.

For American businesses, this move is like getting hit with a surprise tax bill. Supply chains, especially in industries like auto manufacturing and retail, are deeply intertwined with Canada and Mexico. When the cost of importing parts and materials goes up, businesses have two choices: eat the cost or pass it on to consumers. Spoiler alert: they usually pass it on. So if you thought inflation was finally cooling down, think again.

Companies that rely on trade, especially those with heavy exposure to China, are particularly vulnerable. Barclays estimates the tariffs could shave 2.8% off S&P 500 earnings, which might not sound like much, but in a market that’s been running at all-time highs, even a small dip can cause panic.

If you think this is just a problem for big corporations, think again. Tariffs act like a hidden tax on consumers. Everything from cars to electronics to groceries could see price hikes as businesses adjust to the new reality. And don’t even get started on gas prices—Trump’s 10% tariff on Canadian energy could push oil costs up, which means higher prices at the pump.

Sure, Trump hinted at possibly exempting oil, but until that’s set in stone, energy markets will remain jittery. And with summer travel season just a few months away, the last thing Americans want to see is a spike in gas prices.

Of course, the U.S. isn’t the only player in this game. Canada and Mexico have already promised to hit back with their own tariffs, and you can bet China won’t stay quiet for long. Canada alone is planning a 25% tariff on $107 billion worth of U.S. goods. Retaliatory tariffs mean more expensive exports, which means American businesses that rely on foreign buyers—think agriculture, manufacturing, and tech—could be in for a rough ride.

This tit-for-tat strategy isn’t new; we saw it play out in Trump’s first term. But back then, his tariffs mostly targeted China, and they came after a round of big tax cuts that softened the blow. This time, there’s no tax cushion, and inflation is already higher than the Fed would like. That’s a recipe for economic turbulence.

Markets don’t like uncertainty, and right now, there’s plenty of it. Investors will be watching closely to see if Trump actually follows through on these tariffs or if they’re just a negotiating tactic. The fact that he has the power to increase their size and scope if countries retaliate only adds to the unease.

For now, expect some market volatility. The S&P 500 is teetering near record highs, and analysts predict it could swing 3% to 5% in either direction depending on how things unfold. If companies start warning about lower profits due to tariffs, we could see a bigger pullback.

On the consumer side, keep an eye on prices. If businesses start passing costs down the chain, it won’t be long before shoppers feel the pinch. And if inflation picks up steam again, the Fed might have to rethink its rate-cutting plans, which would be another headache for markets.

Trump’s latest tariff move is a big deal, and the effects will be felt across the economy. Businesses are worried, investors are on edge, and consumers should brace for higher prices. While some hope this is just another round of Trumpian brinkmanship, the reality is that tariffs create real costs—whether they stick around long-term or not. So buckle up, because the next few months could be a bumpy ride for the economy.