President Trump’s tariff terrorisation escalated overnight as he doubled the tariff on Canadian steel and aluminium to 50%! And surprise, surprise, Wall Street again didn’t like it, and stocks fell. Our stock market is tipped to fall 69 points at the start of trade. This will mean we could be down around 8% since February 14 and it’s down to the Trump tariffs.

This leads to the all-important question: how worried should you be about this stock market sell off? Before I answer this question, let me suggest that there’s a poem recommended by the world’s best investor that might be appropriate at times like these.

More on that later.

Stock markets have been tentatively worried about these tariffs, how big they’ll be, what countries will cop them and how those countries could retaliate, which will affect global trade as well as world economic growth.

This chart of our S&P/ASX 200 index over the past years shows the latest slide of stock prices that’s hurting our super balances. The chart shows how there’s been big ‘ups’ and ‘downs’ of the stock market since Donald J. Trump won the poll to be the 47^th US President last November.

S&P/ASX 200 Index

Source: Google

The really big trigger for this dumping of stocks over the past few days was because of what the President told Fox News over the weekend.

“There is a period of transition, because what we’re doing is very big,” he said. “We’re bringing wealth back to America. That’s a big thing. ... It takes a little time, but I think it should be great for us.”

He added this when asked if a recession was possible: “I hate to predict things like that [but] look, we’re going to have disruption, but we’re OK with that.”

He did not say “recession”. He said disruption. But Wall Street has taken that as recession linked to his tariff play. That’s why we’ve been made poorer by this slide in share prices.

And things became more worrying overnight as the President raised the 25% tariff on Canadian steel and aluminium to 50% because Canada slammed a 25% surcharge on electricity that it sends to a number of US states.

According to The Guardian, Trump incorrectly claimed that Canada is “one of the highest tariffing nations anywhere in the world” and he now plans to hit the country’s car makers with tariffs that he says would close the industry down!

What we’re seeing are the kinds of bigger-than-life deal making that a guy like Donald Trump would have done behind closed doors. But when these ‘deals’ happen under the glaring light of day and the ‘dealers’ are national leaders with unknown economic and profit-consequences, stock markets are bound to sell first and ask questions later.

I’m gambling that this is a short-term period of uncertainty, and someone will talk sense into President Trump and those who have to bargain with him.

For those who might be too worried about the implication of these Trump tariffs, let’s look at that poem recommended by Warren Buffett, the Oracle of Omaha, as market players have called him.

Today, CNBC recalled that in 2017 he sent this poem by Rudyard Kipling to his shareholders, when stock markets were a little crazy:

  If you can keep your head when all about you are losing theirs ...

 If you can wait and not be tired by waiting ...

 If you can think — and not make thoughts your aim ...

If you can trust yourself when all men doubt you ...

Yours is the Earth and everything that’s in it.

My favourite piece of advice from Buffett has always been: “Be fearful when others are greedy and be greedy when others are fearful.”

As a long-term investor, I see this being an eventual buying opportunity, as I don’t think tariffs will KO world growth. I do think Trump will back off the severity of his tariff plays. No matter what he says publicly, this President does care what Wall Street thinks. Sure, he can ignore the short-term reactions of stock market players but if his policies lead to a crash of the market — and that’s the kind of thing that would worry me — then this President would be embarrassed.

It would mean the big end of town CEOs, who have embraced him as a saviour bringing lower taxes and less regulation, would start call him M-A-D and reckless, as their profits and share prices tumbled.

Meanwhile, the little end of town would be asking why this guy, who was going to make America great again, has just thrown the US into recession, which has thrown them on the dole queue.

I don’t think Donald J. Trump could cop that on his CV, and he’d hate history books referring to the Trump Recession!

PS: President Trump no longer plans to raise tariffs on Canadian steel and aluminium imports to 50% on Wednesday, top White House trade advisor Peter Navarro told CNBC on Tuesday afternoon. This follows the Canadian Premier of Ontario suspending the 25% surcharge on electricity sold to some US states ahead of more trade talks.

Only in America!