Wall Street may be enabling Trump tariffs

President Trump is celebrating the new record in the market with additional tariffs on Canada.Part of his excitement may stem from what the rally allows him to do, which is whatever he wants on tariff policy.Why it matters: In April, an intraday bear market coupled with bond market "yips" pushed Trump to slow his roll on tariff policy. Without that reaction function, Trump won't have much friction to reign in his policy proposals.Driving the news: "I think the tariffs have been very well-received. The stock market hit a new high today," Trump told NBC News on Thursday.Trump posted on Truth Social to tout record highs for stocks. "NVIDIA IS UP 47% SINCE TRUMP TARIFFS," he wrote. (It's closer to 50% now.)While Nvidia's rally isn't related to tariffs, Trump coupling it with trade policy is notable for investors.What they're saying: "Something tells me that the President will not back down unless the market delivers him an April-proportioned message," Mark Malek, chief investment officer at Muriel Siebert & Co., writes in a note.He notes the 21 letters sent out by the administration indicate a weighted average tariff of 30%. That's about triple what the market is pricing in for levies.Between the lines: Policy is historically constrained by market and economic activity, Bob Elliott, chief investment officer at Unlimited Funds, tells Axios.Under Trump 1.0, stocks fell as tensions escalated, and rose on signs of resolution, without a fuller rebound until the Phase I trade deal with China.Zoom out: April taught investors an age-old lesson: Don't lock in losses by selling into a dip. But the buy-the-dip mentality may have also gone too far."One must wonder whether traders have become so certain about buying dips that they no longer sell on bad news, fearing they'll miss a buying opportunity," says Steve Sosnick, chief strategist at Interactive Brokers."We could be setting up situations where highly sanguine investors might be forced to once again reckon with revised earnings guidance and the eventual implementation of tariffs," he writes in a note.The bottom line: Now that the market is back to a record, Trump is taking a more aggressive policy stance on tariffs. The two are linked, Elliott says.This "will have meaningful macroeconomic consequences which are only now starting to be felt," he adds.

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