Donald Trump’s trade saga is gearing up for its next phase, with a two-week countdown leading to a deadline on reciprocal tariffs.
However, this doesn’t imply a lack of economic fluctuations in the meantime, as markets attempt to predict the extent of the White House’s actions.
Trump has granted himself significant flexibility leading up to the April 2 deadline, raising concerns about whether market analysts fully understand his intended actions.
At least one analyst opined that the markets might not be prepared, especially given an administration inquiry aimed at establishing an “effective tariff rate” factoring in various retaliatory elements.
This could yield a staggering figure — potentially 50% in certain scenarios, as noted by Yardeni Research president Edward Yardeni this week.
“That could be a real shocker” for segments of the market still minimizing Trump’s comprehensive tariff strategies, he stated.
“I won’t feel at ease until this situation is resolved, which seems unlikely to happen anytime soon,” he added.
President Donald Trump during a tour of the John F. Kennedy Center for the Performing Arts in Washington on March 17. (JIM WATSON/AFP via Getty Images) · JIM WATSON via Getty Images
The latest period of anticipation comes in the wake of an administration that has introduced new tariff deadlines nearly every week, initiated various investigations, and implemented duties on goods from China, Canada, and Mexico, including steel and aluminum.
Read more: What Trump’s tariffs indicate for the economy and your finances
These deadlines have been postponed and altered numerous times, but Trump has already exceeded the potential economic impact of his entire inaugural term, causing significant market disruptions.
And, as Trump has repeatedly stated, April 2 is deemed to be “the big one,” even though some indicators suggest his administration is aiming for a more structured implementation this time.
Regardless, an intense discussion within the administration about the next steps is ongoing. The Wall Street Journal reported on Tuesday about a recently considered — but ultimately dismissed — proposal that would categorize countries into tiers with varying tariff rates.
The inquiry being conducted by the administration, led by the Commerce secretary, the US trade representative, and the Treasury secretary, is expected to present Trump with a conclusion on April 1.
Trump could potentially act immediately, but he has indicated he wishes to wait until after April Fools’ Day, humorously noting that he is “a little superstitious.”
What he has stressed consistently is that the forthcoming duties will be substantial, aimed not only at balancing foreign tariff levels — which could result in reduced tariffs in some instances — but also addressing other non-tariff barriers disapproved by Trump, such as value-added taxes and other elements unveiled in February.
“What happens on April 2 — each nation will receive a figure that we believe … reflects their tariffs,” Treasury Secretary Scott Bessent stated on Tuesday during an appearance on Fox Business. “For some nations, it could be relatively low. For others, it could be significantly high.”
Trump has also clarified that reciprocation, in his perspective, does not always entail equal tariffs.
He recently mentioned his plan to counter a 50% European Union tariff on whiskey with a 200% tariff on European wine, champagne, and other alcoholic beverages.
The president has also minimized the likelihood of exemptions, informing both reporters and CEOs that many companies will find it impossible to escape tariffs after April 2 — despite having previously offered temporary delays on products such as autos and more long-term waivers during his first term.
In a recent remark, Trump dismissed the notion that exemptions could apply to his newly imposed metal tariffs.
Markets saw a 3% increase recently following a 10% decline but began to dip once more on Tuesday morning, with many on Wall Street asserting that the recent surge does not indicate a market bottom.
Deutsche Bank chief strategist Bankim Chadha even shared in a note to clients on Sunday that he anticipates continued selling but added that a “credible plan to resolve tariff uncertainty” from the president could facilitate the continuation of the business cycle.
While Trump has recently slowed the introduction of new tariff threats — at least following his 200% duties promise on European spirits last Thursday — he continues to amplify what lies ahead.
“April 2nd is Liberation Day for America because we will start reclaiming some of the immense wealth that has been taken from us,” he tweeted on Monday.
The White House has not dismissed the possibility of surprises from Trump before this date.
“I think the president would tell you that all options are always on the table, and he’s always ready to respond if he feels the United States is being treated unfairly,” White House press secretary Karoline Leavitt recently informed reporters.
For now, the best hope for markets may be a lull in tariff discussions, with Yardeni noting in a recent client message that “any day without a Trump tariff comment is a good day for the market.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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