Trump is playing chicken with markets #CanadaFinance

In the traditional game of chicken, two drivers speed toward each until one loses his nerve and swerves off the road. In Donald Trump’s version of the game, everybody sustains some damage.

Trump has been testing the tolerance of financial markets since his first day in office by disassembling government agencies, canceling federal spending, and mounting a trade war with numerous economic partners. Investors have been trying to gauge how disruptive Trump will ultimately be and whether he’ll cause temporary or lasting damage.

Less than two months into his term, Trump has now driven the stock market into a ditch. Markets didn’t flinch much when Trump imposed his first set of tariffs on Chinese imports in February. The 10% levy was less than Trump had threatened, and investors saw it coming.

The stakes grew considerably the week of March 3, when Trump announced another 10% tariff on Chinese imports and a much stiffer 25% tax on imports from Canada and Mexico. America’s northern and southern neighbors are its largest trading partners, and the 25% tax would sharply raise the cost of nearly $1 trillion worth of goods, including cars and car parts, food, construction materials, and energy.

Read more: What Trump’s tariffs mean for the economy and your wallet

The stock market buckled. Trump promptly began backtracking on the North American tariffs, offering temporary exemptions for key categories of products. Yet Trump continues to say more tariffs are coming on European imports and many other products from nations he considers to be unfair trade partners.

Markets are now pricing in more damage from tariffs than they were a few weeks ago, along with rising odds of a recession. The S&P 500 lost 3.5% the week of March 3, with Trump’s retreat on tariffs doing little to calm markets. US stocks are underperforming those in Europe and many other markets.

Investor views of Trump’s economic plans are rapidly souring. “Trump tariff push descends into farce,” Capital Economics declared in a March 7 analysis. “For those keeping score, Trump has now imposed tariffs on Canada and Mexico then almost immediately performed a full U-turn twice in a month.” The research firm points out that since Trump’s reprieve is only supposed to last until April 2, more lurches are probably coming.

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Trump’s latest tariff action led Goldman Sachs to reduce its estimate for economic growth this year from 2.2% to 1.7%. The firm’s inflation forecast rose from 2.1% to 3%. Morgan Stanley made similar downgrades. Trump’s approval rating is also slipping, and that’s in polls taken before the early March sell-off. Americans worried about the price of eggs and other items, meanwhile, heard Trump’s Agriculture Secretary Brooke Rollins suggest on March 2 that they should start raising chickens in their backyards.