Markets had dismissed tariff risks under the assumption that Trump would follow an earlier pattern and back off, in what became known as the so-called TACO trade. That allowed stocks to reach new record-high territory recently, marking a stunning rebound from the collapse triggered by his “Liberation Day” reciprocal tariffs in April.

President Donald Trump on Saturday announced 30% tariffs on the European Union and on Mexico, cementing a new high level of levies with key trading partners ahead of an Aug. 1 implementation. Last year,