Morning from Copenhagen.

Just as markets began getting comfortable with April 2nd as the final deadline for reciprocal tariffs, Trump dropped yet another tariff bomb on autos. While it was already known that tariffs on cars were coming, the timing was arguably a surprise.

The auto-tariff announcement was followed by a clear threat to hike tariff levels on Canada and Europe if the administration sees any signs of coordination against the U.S. This adds more conviction to the idea that he actually means business with the constant tariff headlines. Still, there are valid arguments that this is all about signaling—and the final outcome will likely be far more benign.

What’s interesting is that we’ve seen the Bank of Canada (and potentially now the ECB) lean dovish in response to tariff pressure. Meeting minutes from the BoC yesterday revealed that their decision to cut rates—rather than leave them unchanged—was solely driven by tariffs. That’s likely why European fixed income is bid today, as markets anticipate a similar response from the ECB. And honestly, that seems justified. European growth will take a material hit if the range of goods subject to tariffs expands. Is Trump getting global bond yields lower through his tariff regime?

Despite fiscal stimulus efforts in both Europe and China, our growth indicators have started to fade as the U.S. slowdown spills over. It’s getting harder to label European and Chinese equities as havens.

Chart 1: European Growth Is Rolling Over