U.S. President Donald Trump signs a set of executive orders in the Oval Office of the White House on March 6, 2025, in Washington, DC. The president enacted several executive orders, which included removing a 25% tariff on goods compliant with the USMCA trade agreement.
Alex Wong | Getty Images News | Getty Images
Global markets have experienced significant volatility recently, as investors attempt to adapt to U.S. President Donald Trump’s tariff policies.
This week, as the president’s long-anticipated tariffs on Canadian and Mexican products took effect, equity markets worldwide faced turmoil. On Thursday, Wall Street saw a major sell-off, with substantial declines across all major indices, pushing the Nasdaq Composite into correction territory. European and Asian stock markets have also experienced turbulent trading due to Trump’s tariff announcements and policy reversals throughout the year.
The turmoil on Thursday occurred even as Trump made concessions to Canada and Mexico by postponing certain tariffs until April 2.
Strategists indicated to CNBC on Friday that investors should prepare for further market fluctuations driven by Trump’s trade policies, given his unpredictable nature.
“Volatility will remain with us,” stated Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, in an interview with CNBC. “Headlines are continuously emerging in all directions. Beyond geopolitical uncertainty, there is ongoing substantial economic uncertainty with the U.S. clearly slowing… The situation in Ukraine poses the question of whether we will see a ceasefire or an escalation. Then there are the tariffs, where the ‘strategy’ seems to change every five minutes.”
‘Risk on risk off’ market climate
Jon Cunliffe, head of JM Finn’s investment office in London, concurred that volatility is on the rise now that Trump is back in office—and this trend may persist.
“In 2023 leading up to the election campaign, the 100-day annualized volatility for the S&P 500 was as low as 10%, but we’re now approaching 15%,” he mentioned in an email. “With Trump 2.0, it’s likely that this heightened level of volatility will continue, as his tendency to reverse policy initiatives creates a ‘risk on risk off’ environment.”
Trump has so far placed blame on “globalists” for the recent market unrest, asserting that the U.S. is “regaining what has been taken from us for many years.”
However, analysts have cautioned that the U.S. could also suffer from Trump’s tariff strategies, as domestic duties on imports may lead to increased prices for U.S. consumers. Nations affected by the tariffs have already enacted or threatened retaliatory measures, which could limit their demand for U.S. exports. The tariffs imposed by Trump on Canadian and Mexican products—added to new 20% U.S. tariffs on China, along with threats to impose duties on EU goods—have sparked discussions of retaliatory actions from leaders in Canada and Mexico. China has likewise responded with its own tariffs on U.S. goods, with officials warning they are prepared to engage in “any type of war” with the U.S.
“The uncertainty surrounding policy and the flow of tariff news is heightening concerns about U.S. economic growth and the potential for a trade war, which is likely to keep volatility high,” noted Thomas McGarrity, head of equities at RBC Wealth Management, in an email to CNBC on Friday.
“Additionally, U.S. assets are heavily owned, so unwinding extended positions is also contributing to the recent weakness in U.S. stocks, following a period of stellar returns over the past two years.”
McGarrity added that an improving outlook in Europe—especially with ongoing efforts to reform fiscal policies and promote EU defense spending—was also influencing some shifts within equity markets.
Asian, European markets decline
Wall Street seemed steadier ahead of Friday’s trading hours, with U.S. stock futures inching upward as investors awaited important job data from the world’s largest economy. However, Asia and Europe both witnessed declines in share prices on Friday as regional investors processed the latest trade news from Washington.
“Don’t be alarmed if you feel overwhelmed—you’re not alone,” analysts at Bank of America’s London office remarked in a note to clients on Friday morning, acknowledging that the recent “intense news flow” has impacted investors.
“Clients we met during our marketing trip this week expressed feeling overwhelmed by the rapid succession of significant macro news,” they explained. Economic data signals—such as the Atlanta Fed’s GDP tracker slipping into negative territory—and a challenging policy landscape—characterized by major government job cuts and rising trade tensions—were contributing factors, the analysts added.
— CNBC’s Kevin Breuninger, Brian Evans, and Alex Harring contributed to this report.
