- On “Liberation Day,” President Trump announced a series of broad tariffs that will hit each country differently, and market experts said they had more questions than answers following his hotly anticipated Rose Garden address. Ahead of the announcement, the S&P 500, Nasdaq, and Dow Jones ended the day higher following a bruising and uncertain period for stock markets but as Trump expanded on his plans for trade and hopes for domestic manufacturing, futures took a downturn.
President Trump announced a complex package of tariffs on Wednesday including a broad 10% duty on all imports and a sliding scale of “discount reciprocal tariffs” the President said would be “kind” to other countries while bringing relatively greater wealth to the U.S. Those include a 34% tariff on goods from China and 20% on those from the EU, plus a raft of other percentages for Vietnam, Taiwan, Japan, India, and Indonesia.
Details about how the tariffs will be applied and exempted goods are still being sorted, experts told Fortune, such as whether country-specific tariffs will be layered on top of current tariffs, or on top of the 10% baseline. Trump held up a poster board with a list of tariffs for countries around the globe during his address, but the actual details will be important to weigh carefully, said Jake Schurmeier, portfolio manager at Harbor Capital.
“Maybe there’s marginally less uncertainty, but uncertainty is still high,” Schurmeier told Fortune. “If you’re a consumer or a business it makes total sense to hold off on large purchases or other investments for another quarter or two quarters.” That knock-on effect could lead to negative growth territory pretty quickly, he added.
For consumers, they will “feel the pinch quite quickly,” Michael Orlando, executive director in the J.P. Morgan Center for Commodities and Energy Management at the University of Colorado Denver, told Fortune.
“Retailers price goods for purposes of inventory replacement,” said Orlando. “So even if many goods on shelves were acquired pre-tariff, stores will need revenues now to cover the costs of those replacement goods. If the tariffs are not delayed or talked back, they’ll result in price increases as soon as they hit suppliers.”
In the meantime, Orlando expects equity markets “to suffer,” as they’ve been suffering “on tariff talk for over two months.”
“Markets will open tomorrow with greater certainty that tariffs will remain on the table; and with the downside risk of retaliatory tariffs around the globe,” he said. “And because this round of tariff talk is distinctive in targeting longstanding trading partners and allies, I think the downside risk is significant, at least until the next delay is announced.”
Similarly, Jeff Klingelhofer, managing director and portfolio manager at Aristotle Pacific, told Fortune his initial reaction was that the tariffs are more deeply rooted and negative for markets than was expected. The big questions at this point are how the tariffs will be applied and what negotiations can be had, he said. During Trump’s campaign and his Wednesday address, the President has repeatedly said America has been treated unfairly and that if countries don’t want tariffs—they should drop their own, said Klingelhofer.
“That offramp is potentially there,” he said. “If other countries lower their tariffs, we in turn will lower ours and we’ll all end up in a happier place.”
With his address Trump offered “a little bit of something for everybody,” Klingelhofer said. However, the overall reduction of tariffs all around is likely not Trump’s endgame. He believes Trump is working to reinvigorate manufacturing in the U.S., which is why Trump has focused his remarks in recent weeks on large company investments in the U.S. and the prosperity of America in previous centuries.
Therefore, on the one hand it appears Trump is focused on what he views as unfair trade barriers between the U.S. and China, for instance, and on the other is domestic manufacturing as the key to propping up the U.S. as the wealthiest country in the world.
“That has profound implications that will play out not only over Trump’s presidency but over the coming decades,” Klingelhofer warned.
Certainly, Trump has different goals for tariffs, Paul Christopher, head of global investment strategy at Wells Fargo, told Fortune. One is to raise revenues and another is to obtain leverage in negotiations. However, bringing manufacturing back to the U.S. could take a long time and so might seeing the impact of investments other countries have made in the U.S., he said. In the meantime, manufacturers are likely to look for where they can find the lowest reciprocal rates, and how to negotiate with Trump to get those rates lower.
“The one thing that’s always true is that human nature is going to win out,” said Christopher. “And human nature says, if you put a tax on me, I’m going to find a way to adjust.”
For the next few days, markets are likely to be very uncertain until the details are firmed up, which could see a continuation of the flight to safer, less risky assets, John Canavan, lead financial market analyst in Oxford Economics’ macroeconomic investor services group, told Fortune. Markets already priced in fairly aggressive tariffs, he said. After that initial reaction, investors will want to see precisely what the new tariffs will do to the economy.
Perception and momentum can change really quickly, added Charles Lemonides, founder and chief investment officer of New York–based hedge fund ValueWorks LLC. Tariffs may not have the sprawling negative impact indicated from recent news headlines, he told Fortune. While there’s no question the tariffs equate to a tax and some prices will go up, some companies will benefit and it may not cripple the economy in the way some have predicted, he said.
“This doesn’t match my politics,” Lemonides said. “But just because it doesn’t match your politics, doesn’t mean the policy is going to have a bad impact.”
Currently, there are tariffs of 25% on goods from Mexico and Canada, 25% duties on steel and aluminum imports, and a 20% tariff on products from China. Last week, Trump announced 25% tariffs on foreign-made cars and auto parts that will take effect on April 3. He confirmed on Wednesday that those tariffs would take effect at midnight. The 10% baseline will take effect at midnight on April 5, his executive order states.
Fears remain that tariffs will ultimately bring harm to companies and consumers.
“What we have heard from businesses of all sizes, across all industries, from around the country is that these broad tariffs are a tax increase that will raise prices for American consumers and hurt the economy,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, in a statement. “We urge policymakers to instead focus efforts on accelerating the pro-growth agenda of extending our current tax policy, re-balancing regulations, and unleashing the full potential of American energy—all policies that will grow the economy and create more opportunities for Americans.”
Bradley added that U.S. legislators should focus on brokering new trade agreements to bolster the markets for businesses and workers that will lead to job growth and lower consumer prices.
