Only the markets can stop Trump's tariff regime now

President Trump's gone maximalist again on tariffs, and just like the last time, it appears the only thing that could stop him is a market meltdown.Why it matters: Stocks seem very, very disinclined to stop the historic rally they've been on for the last three months.Catch up quick: Every few hours this week, Trump has thrown down another trade gauntlet.50% levies on Brazil, 35% levies on Canada, threatens to raise the baseline tariff rate against other countries — nothing is stopping Trump's base instinct to use tariffs as one of the most powerful levers of his presidency.The intrigue: His view on the reaction — and what really matters — is also now incredibly clear."I think the tariffs have been very well-received. The stock market hit a new high today," Trump told NBC News Thursday night.Zoom out: Stocks fell to the brink of a bear market in early April after Trump first imposed his sweeping global tariffs.When he paused them a week later, that triggered what has become one of the strongest short-term rallies in history, according to data from Ryan Detrick, chief market technician at the Carson Group.Between the lines: Plenty of strategists believe that rally has been fueled in part by the so-called TACO trade: the assumption that "Trump Always Chickens Out" and pulls back from the most grave tariff threats. But the more intense those threats get, the more at-risk the markets are if he doesn't pull back quickly.The record highs have, in effect, emboldened the president to double down (almost literally) on the trade war.What they're saying: "Something tells me that the President will not back down unless the market delivers him an April-proportioned message," writes Mark Malek, chief investment officer at Muriel Siebert & Co., in a note.Malek noted that the first 21 letters sent out by the administration indicate a weighted average tariff of 30%.That's about triple what the market is currently pricing in for levies.Friction point: That's the other problem, per no less than JPMorgan Chase CEO Jamie Dimon — how the market is pricing current conditions.Dimon said Thursday markets are "a little desensitized," adding that investors are underpricing the risk of Fed hikes off the back of tariff-driven inflation, immigration policy and the increased deficit.He warned of "complacency in the market" being a major threat. What to watch: The market is now back on the tariff clock, as it's been over and over again this year.The new trade deadline is August 1, and while there's still plenty of time, nerves will inevitably increase as the days grow shorter. "Eventually, asset markets catch up," said Bob Elliott, chief investment officer at Unlimited Funds.The bottom line: Sometimes the sequel doesn't hit like the original. These tariff threats are looking very similar to the April levies, but investors have seen this movie before and lost out on the post-volatility rebound. They won't be burned again — and that could be their downfall.

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