Liberation Day: Market Uncertainty, Global Growth Concerns, And U.S. Recession Fears

2025-04-04 03:40:00 ET

Summary

• President Trump announced that he would apply a minimum 10% tariff on all exporters to the U.S., and multiple countries will face an additional tariff.
• With the initial announcement proving to be more aggressive than expected, the market responded overwhelmingly negatively, with stock futures trading lower and the U.S. dollar weakening further.
• For the time being, market expectations for Fed rates have not shifted, with three cuts still expected this year.
• Markets are still waiting to see whether additional sector-specific tariffs will be announced and whether countries will choose to negotiate or retaliate.

By Seema Shah, Chief Global Strategist

What is the announcement, and how does it compare to market expectations?

President Trump announced that he would apply a minimum 10% tariff on all exporters to the U.S., and multiple countries will face an additional tariff that equals half the ratio of the U.S. bilateral trade deficit with the country divided by U.S. imports from that country. The list of countries is extensive, with some countries facing tariffs of over 40%.

Of the major global economies, China will face a 54% tariff (a 34% “reciprocal” tariff on top of the already announced 20%), Europe will face a tariff of 20%, and Japan 24%. Several countries, including the UK and Australia, will have the minimum 10% applied to them....

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