Tariff Shock Sends Global Markets Lower

The Major Markets closed deeply lower last week following President Donald Trump’s release of the “Liberation Day” tariffs. The announcement was complete with tables that the President held up during the Rose Garden press conference. These highlighted the determined tariff charged to the USA and the resulting tariff to be applied by country. The core of the policy was to have a sweeping 10% tariff on all imported goods and then adjustments higher for countries that either charged even higher tariffs on US imports or who have significant trade imbalances.  

The market reacted sharply after hours, resulting in a sell-off in the global markets. For the S&P 500, this gave the worst daily performance since 2020. 

Last week serves as a good reminder that for the markets, things are not a zero sum. The MSCI Developed and Emerging Markets were down significantly as well, as the global markets processed the fallout of what effectively would be a repricing on the exports to the largest economy in the world. 

 

Major Markets		YTD as of 04/04/2025
	Nasdaq
	Dow Jones Industrial
	S&P 500
	MSCI World
	MSCI EM
	Russell 2000
	Bar US Agg Bnd

S&P Sectors		YTD as of 04/04/2025
	Comm. Services
	Cons. Discretionary
	Cons. Staples
	Energy
	Financials
	Health Care
	Industrials
	Info. Technology
	Materials
	Real Estate
	Utilities
		Agent/Broker Dealer Use Only

On Friday, China retaliated with 34% tariffs on all American imports. This served as a return salvo into the weekend with even more threats of tariffs being applied on China.  

However, other countries have already begun to meet with the Trump Administration to work on negotiations in order to mutually adjust their respective tariffs. As many have commented, these tariffs will likely serve as initial negotiating points as the Trump administration looks like to reshore much of the economy for the future.  

Nevertheless, the impact was swift. The CBOE Volatility Index or VIX spiked above 45. This stood as the highest reading since 2020. Not too surprisingly, this caused bond prices to drop. Treasuries saw the yield curve fall by over 25 basis points in the intermediate to longer term durations. 

One of the knock-on effects of last week’s shift in overall market sentiment was an increase in the expectations that the Fed would resume their rate cutting process. The CME Group saw the upcoming meeting probabilities shift somewhat more dovish throughout the remainder of this year. 

https://www.youtube.com/watch?v=E6uFW0gHwXU

https://twitter.com/WhiteHouse/status/1907533090559324204/photo/1

https://www.npr.org/2025/04/04/g-s1-58250/trade-war-escalates-as-china-hits-back-with-34-tariffs-on-all-u-s-goods

https://www.pbs.org/newshour/politics/trump-advisers-say-more-than-50-countries-have-reached-out-for-tariff-talks-with-white-house

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