In his first weekend back in office, President Trump almost started his first trade war with Colombia after its president refused U.S. deportation flights. Trump threatened to implement 25% tariffs on Colombia on Sunday, warning the rate could double to 50% within a week. Amid the standoff, prediction market forecasts regarding the implementation of tariffs surged to as high as 99%.
CFTC-regulated prediction market Kalshi launched a new market, asking traders if Trump would implement his first tariffs by March 2025. Interest in the market soared as trade volume reached over $560,000 by Monday morning. After the Colombia spat, Kalshi’s traders gave Trump about a 70% chance of imposing a tariff by the market’s settlement date.
Trump’s fight with Colombia over immigration
Shortly after taking office, Trump ordered mass deportations of undocumented immigrants. Immigration and Customs Enforcement (ICE) raided several major cities, including Chicago and Miami. To deport the detainees, the United States sent them on military planes, where they were restrained when they disembarked.
Colombia President Gustavo Petro objected to the treatment of the people Trump was sending back to Colombia. He didn’t like that the migrants were being “treat[ed] as criminals.” Petro denied entry to deportation flights until the United States agreed to send them back on civilian planes.
In response, Trump threatened to impose 25% tariffs on Colombia with the possibility of raising them to 50%. Trump also would have:
- Imposed a travel ban on Colombian citizens
- Revoked visas from Colombian officials
- Suspended the issuance of visas to Colombians
Colombia agreed to allow deportation flights into its airspace, and Trump dropped his tariff threats on Sunday night.
Prediction market prices tracked the tariff spat with Colombia. Odds of Trump implementing tariffs rose from 80% to about 95% after Trump’s tariff threats. Once Colombia’s president capitulated, odds of tariffs fell to 80% on Sunday night, then to 70% on Monday morning.
The episode with Colombia showed Trump’s willingness to weaponize tariffs over issues beyond economics, increasing prediction market forecasts that another country will draw Trump’s ire before March 2025.