On Monday evening, USA's elected President Donald Trump threatened to impose high tariffs on the country's three major trading partners to prevent drugs and immigration from entering the USA, causing traders to once again experience Trump's unreliable style in economic policy.

Trump's social media post released at 6:35 PM local time forced traders commuting or having dinner to struggle to assess its market impact.

Indeed, the dollar soared against the Mexican peso and the Canadian dollar, and US Treasury yields rose slightly. USA's equity index futures showed a slight decline.

However, given the significant risks facing global trade, the market’s reaction can be described as calm and brief. As of 10 AM New York time, the S&P 500 index rose 0.2%, while the Russell 2000 small cap index, considered a winner in a wide trade war, fell 0.7%.

Wall Street strategists quickly provided explanations for this muted market reaction. Dave Lutz from JonesTrading stated that this is just the "first round in a long process." His colleague Mike O'Rourke said, "These threats are seen as warning signals." Or as Nomura's Charlie McElligott put it: zzzzzzz.

General Motors and Ford Motor saw their stock prices drop about 7% and 2%, respectively, as they have risk exposure to Mexico through the auto supply chain. An exchange-traded fund tracking Mexican companies also declined. However, the so-called Wall Street fear index, the CBOE Global Markets volatility index, slightly retreated, hovering at a level indicating extreme market calm.

Here are Wall Street perspectives on the stock market's tepid response:

JonesTrading stocks sales trader and macro strategist Dave Lutz.

It seems that the stock market has largely discounted this news, believing that this is just the first round in a long process before tariffs are finally implemented. And when they are ultimately enacted, it may not be as severe.

22V Research founder and chief market strategist Dennis Debusschere.

Linking tariffs with immigration and drugs, people now see it as a negotiating tool. Perhaps this won't be the case in the long run, but that is the current mindset.

Nomura cross-asset macro strategist Charlie McElligott.

Since Trump 1.0, this has been the play of 'the art of the deal', raising the stakes on negotiation leverage and intent... and from there, frankly, this is exactly what Scott Bessent told us over a month ago before the election. So, zzzzzz.

JonesTrading chief market strategist Mike O’Rourke.

These threats are seen as warnings aimed at urging Mexico and Canada to fulfill their expected responsibilities. For Canada and Mexico, it’s not unreasonable to require them to strengthen border control to prevent illegal crossings. The currency movements reflect the potential risks facing Canada and Mexico if they fail to meet their responsibilities. American investors realize that Trump's demands are not high. He is willing to use tariffs to compel Mexico and Canada to take actions they have already agreed to.

Kevin Gordon, senior investment strategist at charles schwab.

I believe this is mainly because the threats are still just threats at this point. We must wait and see what actual actions will be taken once Trump is in office, furthermore, the other side of the issue is immigration policy. I think it is reasonable to expect him to act on these issues, but given the uncertainty of the details and sequence of these policies, the market finds it difficult to price them in right now.

Joseph Saluzzi, co-head of equity trading at Themis Trading LLC.

The market may view this more as a temporary move since it comes with conditions. In other words, imposing tariffs on Mexico and Canada might be a short-term action. Moreover, the market itself has momentum, and with the trading hours shortened this week, it is sometimes difficult to break that momentum.

David Lin, founder and CEO of Linvest21.

The market has become adept at filtering out political noise, especially when there is a lack of direct action or detailed implementation plans regarding tariff threats. Instead, investors remain focused on economic fundamentals and corporate earnings. Additionally, the appointment of Bessent as Treasury Secretary by President Trump has also provided some reassurance. His earlier comments about phase-in tariffs and his solid reputation have reassured the market, helping to mitigate volatility and maintain stability.