Just yesterday morning, the market was largely shrugging off the latest tariff round that was expected from President Trump. Fool me once, shame on you...Remember, investors had already panicked a month ago, on the eve of when 25% tariffs on Canada and Mexico were originally supposed to go into effect. 

But on Feb. 3, as Mexico and Canada scrambled to come up with concessions, the president delayed the tariffs for one month--until today. Stocks breathed a temporary sigh of relief, though later resumed selling off. And the president did still press ahead with his 10% tariff on China that day, which went largely under-reported. All in all, the Nasdaq dropped 4% last month, its worst performance in nearly a year. 

Tobin Marcus of Wolfe Research warned us yesterday--when stocks were only down half a percent--that the market was still being way too complacent about today's tariff risk. And sure enough, an hour later, the president reiterated that tariffs would indeed move forward, and the Dow promptly slumped 700 points, and the S&P slid almost 2%. 

The losses are continuing today, as it becomes clear that tariffs could actually stick this time. Canada's Trudeau has now announced a 25% retaliatory tariff on certain U.S. goods, with a slice of that effective today and a larger chunk going into effect 21 days from now. Doug Ford, Ontario's premier, has threatened cutting off electricity to the U.S. 

Mexico's Sheinbaum said their retaliatory measures will be announced on Sunday. Stocks of carmakers like Ford and GM, and auto suppliers like Aptiv which all have exposure to the North American supply chain, are down another 3-4% this morning. Chipotle is selling off again over concerns that guacamole prices will go up.

Target's CEO warned in a CNBC interview this morning that they might have to raise prices on bananas, strawberries, and avocados in the days ahead because of the Mexico tariffs. That--along with their weak sales outlook this year--sent shares tumbling 6%. Best Buy is meanwhile down 15% after the company noted on its earnings call that China and Mexico are its top two supply chain sources, "making price hikes for American consumers highly likely." 

China has also announced retaliatory measures. Last month, they initially targeted U.S. energy imports and added two companies (PVH and Illumina) to the "unreliable entities" list. Today, they've added tariffs including 15% on corn and 10% on soybeans starting next week. They've added 10 more mainly defense companies to the unreliable entities list. And export controls have been imposed on 28 companies, including General Dynamics, Boeing, and Lockheed. 

Whew. No wonder the market is in a tizzy trying to digest all of this. "Our pre-election base case was that China tariffs would rise to 30%," Wolfe's Marcus wrote a few days ago--and now, we're already there. Nomura's Ting Lu estimates the average tariff rate on Chinese goods will now hit 33%, up from 13% before Trump took office. 

"It was striking the extent to which markets shrugged off an incremental 10% tariff on China [last month], even when it amounted to an overnight doubling of the total tariffs imposed during the entire 2018-19 trade war under Trump 1.0," Marcus wrote last week.

"Next week may look different," he warned--a prediction that is now looking quite prescient. Markets have to contend with hefty tariffs on China, Canada, and Mexico all at the same time, tariffs that Dean Maki told us will slow the economy later this year, on top of the sluggish first-quarter growth we've already seen.

All the major averages except the Dow are now lower than they were when Trump was elected back in November. The honeymoon is most certainly over. 

See you at 1 p.m.!

Kelly

Twitter: @KellyCNBC

Instagram: @realkellyevans