Trump Tariffs 🌍

Market Musings 4/2/2025

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

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The #Tariffs are here－what investors need to know…

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The White House just announced a massive slate of #Tariffs on essentially every country.

As we mentioned last time, markets have been oscillating waiting on #Tariffs to determine the next step. Well, it got it… Afterhours, market futures absolutely tanked on the news.

Markets had been rallying on hopes #Tariffs wouldn’t be so bad, but we essentially got the doomsday scenario plus more.

So, what was announced?

First, the White House went through with a universal #Tariffs of 10%. This minimum baseline tariff is levied on every country regardless of their trade surplus or deficit with the US.

Second, the US is tacking on additional reciprocal #Tariffs based on their perceived #Tariffs on the US.

It’s important to note each countries’ basis includes more than just #Tariffs, but estimates for currency manipulation and trade barrier impact as well. Now, those numbers could be disputed, but not something we’re getting into here. The reciprocal #Tariffs for each country is half that perceived impact with a minimum baseline.

For example, the EU’s basis is 39%, so the tariff is 20%. That’s 10% for the baseline plus 10% additional. Meanwhile, the UK’s is 10%, so the tariff is 10%. Half would just be 5%, but again the minimum is 10%.

Third, Canada and Mexico appear to be excluded from these #Tariffs, but still have their 25% still going into effect anyways.

While China is not excluded, the additional 34% reciprocal #Tariffs adds to the existing 20% from before. This jacks up the China’s #Tariffs to 54%…

So now what?

Well, this was announced late afternoon and after markets closed (for obvious reasons…). We see trade war retaliation next. Multiple countries including China, the EU, Japan and Mexico have already said they would respond to additional #Tariffs.

We expect retaliation announcements to start coming in Thursday and Friday. It’s no surprise the US #Tariffs were announced today and other countries will likely have been planning for scenarios.

Regardless, global markets are likely in for a bloodbath tomorrow. We see more turbulence solidly putting markets into correction territory and could see the US continue to deteriorate into a #Recession. #Recession odds have been around 40% recently, but we expect those to increase tomorrow…