Dow is set to open 1,000 points lower, a day after President Donald Trump’s ‘Liberation Day’ tariff announcements. Nasdaq Composite and S&P 500 indices could open 3% lower.
US stock market futures are sharply down on Thursday as President Donald Trump imposed sweeping retaliatory tariffs ranging from 10% to 49% across various products. Trump’s tariff announcements were made after the market closed on April 2, so the real impact will be seen today when the market opens on April 3.
Markets on open today are expected to react sharply, but the timeline for the tariff implementation may help to provide some support. Already, bond yields are down, gold has retreated after making another record high and recession fears have resurfaced.
The baseline 10% duty goes into force on Saturday, one minute after midnight, with any higher levies taking effect on April 9. This means that governments have time to engage in consultations and renegotiations to lessen the impact of tariffs.
Markets hate uncertainty. April 2 Liberation Day announcements were supposed to remove the uncertainty around tariffs. But that didn’t happen to the full extent.
The market action now shifts to what happens after April 9. “Countries and trading blocs must decide whether to retaliate with tariffs of their own, or to pacify Trump and seek lower, or even no, tariffs on their exports. In addition, we shouldn’t forget that tariffs on pharma, lumber, chips, and potentially other sectors remain in the pipeline.
Furthermore, it remains highly likely that Trump will ratchet up, or down, tariffs, depending on relations with other countries as time goes on, and his mood on any particular day,” says Michael Brown, Senior Research Strategist at Pepperstone.
Nvidia, Palantir and Tesla are down over 3% in the pre-market session, while Apple trades over 6% lower, with Nike shares down over 9% in pre-market.
Trump declared that the US would slap a minimum 10% tax on practically all countries. He also proposed country-specific duties on 60 nations, equivalent to half the amount that the administration believes those countries pay on US exports in the form of tariffs.
Tariffs will be imposed on all of America’s main trading partners, including a 20% rate on imports from the European Union, 26% on Japanese imports, and 34% on imports from China. Markets fear that such measures could start a global trade war impacting economies and across the board.
These tariffs are likely to be inflationary, forcing the US Fed to re-examine its monetary policy and resort to a front-end rate cut. Will Trump backpedals and softens the blow remains to be seen.