Markets had dismissed tariff risks under the assumption that Trump would follow an earlier pattern and back off, in what became known as the so-called TACO trade. That allowed stocks to reach new record-high territory recently, marking a stunning rebound from the collapse triggered by his “Liberation Day” reciprocal tariffs in April.

U.S. stock index futures fell on Friday, as President Donald Trump amplified his tariff offensive against Canada, adding another layer of uncertainty around Washington's trade policies.

Stocks on Thursday were shaking off earlier weakness following President Donald Trump’s latest tariff threats, with all three major U.S. indexes only a short distance away from record highs.