Key Insights:

• Trump confirms 25% tariffs on foreign vehicles starting April 2, projects $100 billion boost.
• He plans trade talks with countries like the U.K. after reciprocal tariffs launch next week.
• Markets drop 5% this quarter as tariff uncertainty fuels inflation fears among investors.

President Donald Trump of the United States will announce new tariffs on April 2 and is already eyeing negotiating the tariffs with global partners afterwards. While aboard Air Force One on his way to Florida, he appeared to signal a willingness to have talks with trading partners such as the United Kingdom. Trump emphasized that negotiations regarding eliminating the tariffs would occur in all likelihood after the implementation of the tariffs, which he said were happening after years of what he described as unfair trade deals.

The Announcement of Tariffs is Coming

Trump’s new trade action will confront a $1.2 trillion deficit in goods, using April 2 as the date of “Liberation Day”—the focus being on reciprocal tariffs.  He declared a 25% tariff on cars manufactured outside the country, effective immediately, with pharmaceutical tariffs to come. But he provided no particular rates or definitions for the pharmaceuticals, making it difficult for the markets to speculate on effects or if they would occur at all. The markets are uncertain as Trump likes to blend harsh language with platitudes about fairness and this week indicated that tariffs might take people by surprise regarding the fairness to other countries. However, he cautioned that if the EU and Canada made a tariff agreement against the U.S. market, they could expect their tariffs to be higher.

Wall Street Is Feeling the Heat

Since his inauguration in January, the stock market has stumbled out of the gate. The S&P 500 is down about 5% for the quarter. It fell 2% on Friday, after the government reported higher consumer spending and prices, which stirred fears of tariffs creating inflation. Market strategists expect lots of volatility around the April 2 announcement, with prices increasing and decreasing closely tied to news tariffs and reactions from across the globe. Trump expressed his desire to make deals, the U.K. was cited as a potential target, but mentioned they would be on hold: “We’ve been taken advantage of for years, and that will end now,” which implicated the time period after April. We will also have a press conference next week announcing the proportionate tariffs to focus on trade. 

Auto Sector in Focus

On Wednesday, attention turned to the auto sector when the President imposed a 25% tax on vehicles. He asserted that it would help U.S. manufacturing and that there could be $100 billion in revenues, while also indicating a broader effort to reshape U.S. trade policy from predominantly free-trade agreements. In addition to autos, the President is also focusing on pharmaceuticals, although not much guidance was provided from him dollar wise. The optimism from late 2024 is fading and replaced with headlines regarding tariffs shaking up Wall Street. Mark Malek, Chief Investment Officer, Siebert Financial, asserted that there was downside risk prior to the earnings season. Additionally, Michael Arone, State Street Global Advisors, believes volatility will rise around the April 2 deadline.

 Global Trade Under Scrutiny 

Upcoming tariffs provide an opportunity to learn about the countries and industries affected most by Trump’s tariff effort. The administration’s goal is to level the playing field by imposing reciprocal tariffs on all of its trading partners. It is also important to underscore that uncertainty from friends and adversaries threatens retaliation, obscuring potential outcomes. Accordingly, Trump continues pursuing a tariff strategy even though exact dates may be provided for tariffs being put in place, because anticipated potential negotiations keep the markets guessing. As we approach April 2, the world is watching to see how this developments potentially changes trading relationships with the United States