As we were preparing the Easter and Passover weekend, it was easy to forget another milestone on Thursday. Yes, it was a year ago that day that the Rose Garden was filled with the triumphant air of "Liberation Day." President Trump signed Executive Order 14257, launching the world into a tariff chaos, that effectively reset the global trading board. Today, we are dealing with another Trumpian bout of chaos with the Iran war and near closure of the Strait of Hormuz. If you thought last year’s party was a thunderclap, this is bordering on a hurricane.

To understand where we are, we have to look at the "V" vs. the "Slant" across key metrics. Looking at the S&P 500, we saw an initial 11% drop in April 2025 that recovered by May. Today, it's down 3.8% year-to-date and grinding lower. In Canada, the TSX was volatile but buoyed by resource hopes last year; yet now, even though economic fundamentals have moderated, the TSX is still sporting a 4.4% gain so far this year. Energy markets tell an even starker story: Brent Crude was sitting around $75 a barrel in April 2025, but following the Hormuz closure, we are staring at $120. Finally, looking at the 10-Year Treasury Yield, last year's flight to safety pushed yields to the 4% area, while today we are pushing towards 4.5% on stagflation fears.

Source: LSEG Datastream

In 2025, the market treated the tariffs as a negotiation tactic—a "Trumpian" flare for the dramatic that would eventually be dialed back. And it was; by September 2025, the PTAAP (Potential Tariff Adjustments for Aligned Partners) gave the market the "out" it wanted. But 2026 is different. The "Chicken-Out" factor has been neutralized by the Iran conflict. You can’t negotiate a tariff exclusion with a closed Strait of Hormuz. The "geopolitical risk tax" is now a permanent fixture of the 2026 balance sheet.

Desensitization or Complacency

There is a dangerous narrative floating around trading desks that the market has "gotten used" to the chaos. I disagree. We haven't gotten used to it; we’ve just lost the ability to react to every fire when the whole neighborhood is burning. In April 2025 it was about trying to figure out what a 10% global baseline tariff actually meant. Fast forward to today and it is about price exhaustion: the market is no longer reacting to headlines because it has priced in a permanent state of friction. This isn't complacency—it’s institutionalized calcification.  When volatility becomes the baseline, capital stops flowing to innovation and starts hunker-down hedging.

Tariffs vs. Tankers

Last year, the administration’s favourite talking point was that "China is paying the tariffs." While we know the US importer actually cuts the check, the impact on the American consumer in 2025 was surprisingly muted. Why? Because in 2025, corporate margins were fat. Companies "ate" the 1.3%–2.0% inflation increase to maintain market share. That buffer is pretty much done. But, the 2026 inflation story isn't about a 10% duty on a toaster: it’s about a near-100% increase in the price of Brent crude futures. Gasoline prices have also surged 17% since the February 28th strikes, and diesel—the literal fuel of the supply chain—has doubled in price in some regional hubs. Unlike the 2025 tariffs, these energy costs cannot be "absorbed" by a corporate balance sheet. They are being passed directly to the consumer at the pump, the grocery store, and the heating bill.

The Gap Becomes a Canyon

If last April exposed the K-shaped recovery in the U.S., this April has confirmed a permanent K-shaped divide. The top arm (the protected), including large-cap energy and defence contractors, is having a generational year. If you own the oil or the missiles to protect the oil, life is good. Furthermore, the "One Big Beautiful Bill Act" (OBBBA) tax cuts have largely flowed to the top 20% of households, who now hold 72% of total US wealth. Meanwhile, the bottom arm (the pinched) is hitting a wall. Wage gains for the lowest-paid workers have decelerated, and for the first time since the pandemic, they are being outpaced by the cost of living. When your commute costs 20% more and there are added price pains coming down the pipe from supply shortages, the "Trumpian Boom" feels very much like a "Middle-Class Bust."

The Bottom Line

It would be a mistake to say that the tariff distortions implemented a year ago have gone away, even if Trump has walked back and de-escalated what could have been a recession-producing event. At the time of writing, we were digesting additional misaligned social media posts from the oval office that did nothing to advance a credible view as to de-escalation in the middle east crisis and that is a key difference between then and now. Market participants were able to game the “jab and weave” tariff salvos from the White House last year, knowing that there probably wasn’t going to be a long-lasting economic price from those tariffs (a view that I continue to disagree with). There is no predictability today and the growing consensus is that even a “walking back” may not prevent economic fundamentals from deteriorating. What next year’s anniversary will look like is anyone’s guess.

On behalf of the Pyle Wealth Advisory team, have a wonderful week.     

Andrew Pyle