Market Data
Betting Markets Predict Trump’s Next Move: More Tariffs and Rising Inflation
The Trump administration’s recent imposition of double-digit tariffs on Mexico, Canada, and China has sent shockwaves through global financial markets. Investors are bracing themselves for what could be a wider trade war, and they’re turning to an unlikely source for clues: betting markets. platforms like Polymarket and Kalshi, which gained prominence during the 2024 election for accurately predicting Donald Trump’s victory, are now being used by speculators to bet on everything from pop culture to the weather. This week, following the president’s tariff announcements, these platforms have seen a surge in activity, with bettors wagering on where Trump’s protectionist policies will strike next.
The European Union: The Next Target?
Speculators on Polymarket are betting heavily that the European Union (EU) will be the next target of Trump’s tariffs. A bet on the platform, which has seen about $173,000 in trading volume, gives an 83% chance that the EU will face tariffs by April 29, within the window of Trump’s first 100 days in office. This prediction aligns with Trump’s recent hints that tariffs on the 27-country bloc could happen "pretty soon." The president’s remarks sent Europe’s Stoxx 600 index tumbling 1.3% on Monday, though it later recovered moderately. Another Polymarket bet suggests that if tariffs are imposed on the EU, they could range from 10% to 20%. This would likely have significant implications for global trade and could deepen the economic uncertainty already sparked by the tariffs on Mexico, Canada, and China.
Panama, Colombia, and South Korea: Other Potential Targets
While the EU is the most likely target according to Polymarket speculators, other countries are also in the crosshairs. Bettors on the platform see a 36% probability that Panama will face tariffs, likely due to rising tensions over the Panama Canal. The Trump administration has called for the canal to be returned to U.S. control, citing Chinese influence and unfair treatment of U.S. vessels. On Monday, Secretary of State Marco Rubio warned Panama to curb China’s presence or face U.S. action, though it’s unclear what form that action might take. Meanwhile, bettors on Kalshi see a higher chance of tariffs on Colombia and South Korea, though the specifics remain unclear. Polymarket speculators also see some chance that Taiwan and Colombia could be drawn into Trump’s trade disputes, though these are considered less likely, with probabilities of 38% and 20%, respectively.
Denmark and Greenland: A Potential Flashpoint
Denmark could also become a target in Trump’s trade disputes, though this is considered a long shot by most speculators. The country has clashed with Trump over the ownership of Greenland, a dispute that has been a source of tension since Trump’s presidency. While there is no concrete evidence that Denmark will face tariffs, the betting markets suggest that anything is possible in the current geopolitical climate. The unpredictability of Trump’s trade policy has left investors and analysts scrambling to anticipate his next move, and the betting markets are one of the few indicators they have to work with.
Will the Current Tariffs Stick?
Despite the speculation about new tariffs, there is doubt among bettors about whether the current tariffs will remain in place. On Polymarket, speculators see a 64% chance that the Trump administration will revoke the Canadian tariffs by May. This aligns with Trump’s history of using tariffs as a negotiating tool. The president delayed tariffs on both Mexico and Canada after reaching concessionary agreements with those governments, and it’s possible that he could take a similar approach with other trading partners. However, the tariffs on China remain a wildcard, and it’s unclear whether Trump will continue to escalate the trade war with Beijing.
Inflation Expectations: Egg Prices and Beyond
While the tariffs have dominated the headlines, they’re not the only economic indicator being closely watched. The betting markets are also pointing to rising inflation, with egg prices emerging as a bellwether for consumer prices. Speculators on Polymarket believe the price of a dozen eggs will continue to rise, with the highest probability assigned to a range of $5.50 to $5.75 a dozen in February. This would represent a significant increase from the U.S. city average of $4.14 per dozen in December, according to data from the Federal Reserve Bank of St. Louis. Egg prices have become a rallying cry for politicians and voters, and the betting markets suggest that they could continue to climb in the coming months.
The broader inflation outlook is also a source of concern. On Kalshi, the outlook for inflation based on the consumer price index (CPI) ticked up sharply over the weekend, with the highest chances for the 2025 inflation rate now assigned to a range of 2.6% to 3%. This would represent a modest increase from current levels, but it’s a trend that economists have been warning about for some time. The tariffs on major trading partners, combined with the broader economic uncertainty, have created a perfect storm that could drive inflation higher in the coming years. Whether or not the betting markets prove accurate, one thing is clear: the economic landscape under the Trump administration is likely to remain volatile, with implications for consumers, investors, and businesses around the world.
