During Donald Trump鈥檚 first successful campaign for the White House, a formulation tried to explain how he was viewed by his fans and his detractors.

His opponents took him literally, but not seriously. His supporters took him seriously, but not literally.

When he took office, it emerged that everyone should have been doing both all along.

But some people, including a significant number from Wall Street, are still refusing to take him literally.

The day after Trump鈥檚 latest victory, the Dow Jones Industrial Average shot up more than 1,500 points, its best day in two years, and hit a new record high, as did the S&P 500 Index.

That would be expected if Trump was a fairly conventional conservative, business-friendly politician. Lower taxes, less regulation, that sort of thing. 

Trump, and many of his current crop of close advisors, including incoming vice president J.D. Vance, are nothing of the sort.

They鈥檙e a strange breed of right-wing populists, lashing out at big business as often as they talk about lower taxes.

But the key piece of evidence that no one on Wall Street is taking Trump literally is his key economic campaign promise 鈥� tariffs of between 10 and 20 per cent on all goods coming into the United States, and up to 60 per cent on all goods from China.

If we take Trump at his word, this would set off a global trade war unprecedented since the Great Depression. It would raise the costs of clothing, electronics, fruits and vegetables, and fuel.

It would also, according to a recent TD Bank economic study, knock 2.4 per cent off Canada鈥檚 GDP over two years. And that鈥檚 with the 10 per cent level of tariffs. Trump has been vague about whether he prefers 10 or 20 per cent.

For comparison, our GDP fell by 3.3 per cent during the 2008 financial crisis.

Would Trump really do it, though?

The argument for not taking him literally is that massive tariffs would drive up prices, boost inflation, and be wildly unpopular with the American public. A rational politician wouldn鈥檛 do that, right?

But Trump has tried to put his plans into practice before. He signed an executive order banning people from half a dozen majority-Muslim countries from entering the U.S., he tried to 鈥渂uild the wall鈥� along the border with Mexico, adding or upgrading 450 miles of barriers, and he did actually slap tariffs on a number of goods from a wide variety of countries, including Canada, Mexico, and the European Union.

So is Trump using his promises as mere rhetoric, or is this the start of a tough negotiation over trade deals? How much should we worry?

History suggests that we should worry quite a bit. Trump may or may not back down, but the likelihood that he will try to impose his tariffs is high. Unlike building walls, launching a trade war only takes a signature on a piece of paper.

It will be interesting to see if those euphoric stock traders are taking Trump literally, or seriously, a year from now.