As markets buckle in for a turbulent day, Deutsche Bank has got a dose of reality for analysts caught unawares: Trump's tariffs are precisely what he promised.
While some analysts hedged their bets against President Trump not following through on his campaign rhetoric , Deutsche's global head of macro research, Jim Reid, said they should have seen it coming .
After all, it was on the campaign trail that the then-Republican nominee began floating policies including tariffs on countries such as Canada, Mexico and China.
Yesterday this pledge was made a reality, with the Commander-in-Chief implementing an additional 25% tariff on imports from Canada and Mexico, as well as a 10% added tariff on imports from China.
And while analysts are perhaps shrewd not to take President Trump at his every word, they also shouldn't have discounted the wishes of the Oval Office.
Reid told clients in a note over the weekend: "Standby for a manic Monday as the world tries to come to terms with the 'shock' tariff announcements from Mr Trump’s administration on Saturday night.
"I say shock, but all Trump did was follow through on exactly what he’s been saying he’s going to do since November. The market has refused to take that threat seriously though, completely under-pricing the risks. So, this leaves the weekend news as a severe shock."
Markets are down at the time of writing, suggesting a negative instead of expectant reaction to this weekend's news.
The FTSE 100 is down 1.2% on Monday morning, the Hang Sing index down 0.04% and the S&P 500 down 0.5%.
'Canada and Mexico may enter a recession'
Reid, per the note seen by The Guardian , also points out that the tariffs' surprise and magnitude of impact are significant.
"These three countries make up around 40% of imported U.S. goods, at around $1.35tn," he writes. "To put this is some perspective, in the first Trump administration, the U.S. targeted around $350bn of Chinese goods. So this is huge versus anything seen for decades with regards global trade and at face value takes us back to the protectionist period between the two world wars in terms of scale of tariffs."
Some analysts have been right (so far) in not taking all of Trump's words verbatim.
For example, the President previously said he may impose tariffs of up to 60% on China—much higher than the 10% reality thus far.
Back in December, Goldman Sachs's Ronnie Walker said he was banking on tariffs of 20% on China—allowing him wiggle room for an accurate call if the Oval Office imposes further hikes.
He wrote in a note seen by Fortune : “The China-focused tariffs are likely to draw from the lists of goods created during his first term and could be imposed fairly quickly."
Walker also suggested he wasn't penciling in a universal tariff (a policy floated by President Trump on the campaign trail to add an additional 10% or 20% on every import to the U.S., no matter the nation of export) which is also yet to come to fruition.
“While Trump has also proposed a universal 10% to 20% tariff on all imports, we see this as a serious risk but not the baseline,” Walker wrote at the end of last year.
UBS draws Star Wars comparisons
Meanwhile, at UBS, chief economist Paul Donovan is examining fiction to draw parallels with the new administration.
"All economists are geeks," he began is morning audio note on Monday. "The profession is bound to be tempted to draw parallels between U.S. President Trump's plan to aggressively tax U.S. consumers of foreign goods and the Star Wars movie, The Phantom Menace.
"Trump as the Trade Federation leader, Trump’s main donor Musk in the role of Chancellor Palpatine—railing against bureaucracy—and economists as Jedi Knights, trying to preserve order and prosperity.
"But this is real life, not fantasy and markets are likely to focus on the real world consequences of these proposed taxes."
And unlike Deutsche Bank, UBS is still not entirely sold on Trump's tariffs making it from silver screen comparisons to the real world.
"There is a question as to what will actually happen," Donovan continued. "The taxes ... come into effect on Tuesday. The speed with which Trump retreated from taxing imports from Columbia does raise some prospect of these taxis not being out into effect—or being put into effect for a short time.
"That would avoid much of the potential damage to the U.S. economy—but not all of it."