All bets about Trump’s stance and the tariffs’ start date are on
Risk appetite to be supported by a softer set of announcements
US data could further increase concerns about stagflation
‘Liberation Day’ Is Upon Us
The so-called ‘Liberation Day’ has finally arrived, and it is probably the biggest day so far in US President Trump’s second term. Speculation is rife, with a plethora of reports, sometimes quite contradictory, about what Trump is going to announce today, at the new time of 20:00 GMT.
An array of scenarios is circulating, with the key ones being three: (a) a universal tariff applied to all imports regardless of their origin; the level of the tariff could be as low as 10% or as high as 25%, (b) different tariffs imposed on different countries based on the trade imbalances, which means that Canada and China will probably be more heavily penalized compared to other countries that have smaller trade surpluses with the US, and (c) industry-based tariffs, similar to the recently announced tariffs on car imports.
Trump has the option to mix and match the above scenarios if he wishes to punish countries such as China. Additionally, according to Secretary of the Treasury Bessent, the announced tariffs could also act as a cap, with the affected countries being able to lower them by meeting Trump’s demands. It is not known at this stage if Denmark will be asked to hand over Greenland to avoid tariffs.
Interestingly, there is also the question of the start date of these tariffs. Trump could announce the immediate imposition of these trade restrictions or postpone them for a specific period of time, such as one month, as he did with the auto part imports, also giving time for further negotiations with the targeted countries.
Markets Want Clarity but Crave a Softer Stance by Trump
Markets are in anticipation mode, fearing the worst-case scenario of very harsh tariffs announced. Investors, though, are hoping that, at the nick of time, Trump might opt for low-level tariffs, even if this stance is accompanied by an outright threat by Trump of much harsher trade restrictions down the line if the affected countries fail to conform to his demands.
Risk appetite is in desperate need of a boost, particularly as US equity indices have fully surrendered their post-US presidential election gains, and the is hovering almost 13% below its mid-February 2025 highs. On the flip side, the ’s reaction to today’s tariff decisions is a slight mystery, as a harsher set of trade restrictions could also result in another episode of dollar weakness against the .
Interestingly, both and are preserving their recent gains but are expected to follow divergent trends later today. Gold has been boosted by uncertainty and continued dollar weakness, and it is expected to remain mostly supported by the possibility of a full-blown trade war. On the other hand, oil could suffer if today’s announcements significantly increase the chances of a global growth slowdown and/or a US recession.
Key US Data Ahead of Trump’s Announcements
Ahead of the tariff announcements, the calendar is busy with key US data. Following yesterday’s weak March , stagflation is firmly back on the table. Both the and components retreated further into contractionary territory, and the prices paid component surged to the highest level since June 2022.
With most Fed members highlighting that “hard data” is still pretty solid, the focus shifts to the . Economists are forecasting a 115k increase in private , up from the 77k jump recorded in February, which was the weakest rise since January 2021. A soft report could increase the chances of a May 7 rate cut, but mostly bring forward the next fully-priced-in rate cut to June.
