Global Markets Wait In Fear For Trump's 'Liberation Day' Tariffs

Markets worldwide fluctuated on Tuesday as investors braced for US President Donald Trump's sweeping "Liberation Day" tariff announcements, hoping they would free businesses from the trade-policy uncertainty that has weighed on markets for weeks. President Trump is set to unveil "reciprocal tariffs", aligning US duties with those of other nations, on Wednesday afternoon at an event at the White House Rose Garden. 

The American commander-in-chief on Sunday said the levies will include all countries, but specific details were scant. He has already imposed a range of import levies on China, Canada and Mexico and is poised to introduce auto tariffs this week.

According to a report by The Washington Post, White House aides have drafted a proposal to impose tariffs of around 20 per cent on most imports to the United States. White House spokeswoman Karoline Leavitt said reciprocal tariffs on countries that impose duties on US goods would take effect immediately after Trump announces them, while a 25 per cent tariff on auto imports will take effect on Thursday. 

Markets Fluctuate

Global stocks remained volatile ahead of the Trump Administration's so-called "reciprocal tariffs", which the Republican billionaire said were required to combat unfair trade imbalances with countries that target the United States. In the US, shares edged higher in choppy trading on Tuesday, while safe-haven gold soared to a record peak.

On Wall Street, the benchmark S&P 500 and the Nasdaq ended higher after losing ground earlier in the session, with gains in consumer discretionary communication services, consumer staples and technology stocks offset by losses in healthcare and financial equities. The Dow finished a shade lower.

"In terms of the upcoming tariff announcement, we still don't know which countries they'll be imposed on and what rate. It's fair to say that the administration might not have the final plan ready as yet," Deutsche Bank strategist Jim Reid said.

The Dow Jones Industrial Average fell 0.03 per cent to 41,989.96, the S&P 500 rose 0.38 per cent to 5,633.07 and the Nasdaq Composite rose 0.87 per cent to 17,449.89. 

European stocks also rallied, recovering from the previous day's bout of profit-taking, particularly in assets that are highly vulnerable to US tariffs. The benchmark pan-European STOXX 600 index, which rose 5.1 per cent in the first three months of the year, ended up 1 per cent, with technology, industrial and financial stocks leading the way.

Asian stocks also fell in early trading, after a choppy US session. Japan's Nikkei slipped 0.3 per cent and South Korea's benchmark index was 0.57 per cent lower.

Chinese stocks opened slightly mixed, with the blue-chip index up 0.14 per cent. Hong Kong's Hang Seng was 0.3 per cent lower in early trading.

In India, the market continued its downward move for another session on Tuesday, with the Nifty 50 sinking 1.5 per cent. The reports suggest further weakness. Uncertainty is running high, and various measures of stock, bond and currency volatility have risen sharply in the past few days, reflecting the challenge for investors of trading the unknown.

Gold Eases

Gold eased after hitting a new record high for a fourth straight session, hitting $3,148.88 per ounce. It fell 0.15 per cent to $3,118.25 an ounce, while US gold futures settled 0.1 per cent lower at $3,146.

Mark Malek, chief investment officer at SiebertNXT, said investors are not just faced with uncertainty from tariffs, but they are also worried about the possibility of a looming economic slowdown given weakness in recent data. Data from the Institute for Supply Management showed US manufacturing contracted in March after growing for two straight months. A separate report from the Labor Department showed US job openings fell in February.

"I can tell you anecdotally that the number of client calls that we've been taking lately has increased, and it's not necessarily about tariffs but they are worried about the economy," Malek told news agency Reuters.

"They are losing confidence, and that's investor confidence, which is a tough thing to fight." 

Dollar Under Pressure

Demand for the safety of Treasuries sent yields lower, with benchmark 10-year note yields falling 8 basis points to 4.165 per cent. In Europe, the yield on benchmark German 10-year Bunds fell 0.3 basis points to 2.679 per cent.

Investor caution toward US assets has resulted in continued pressure on the dollar, which posted its worst first-quarter performance against a basket of currencies in nine years this year, with a drop of nearly 4 per cent. The Japanese yen held firm, as did the Swiss franc, as traditional safe-haven assets drew demand. 

The yen strengthened 0.25 per cent against the greenback to 149.57 per dollar. Against the Swiss franc, the dollar weakened 0.07 per cent to 0.884 franc. The euro was down 0.25 per cent at $1.079. 

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.04 per cent.

The Australian dollar strengthened 0.48 per cent versus the greenback to $0.6276. The RBA held rates at 4.1 per cent, having just cut them by a quarter-point in February for the first time in over four years. Bitcoin, meanwhile, gained 3.15 per cent to $85,033.03.

Oil On Edge

Oil prices edged lower as traders weighed reciprocal tariffs from Trump and his threats to impose secondary tariffs on Russian crude and attack Iran. Brent futures settled 0.37 per cent lower at $74.49 a barrel. US West Texas Intermediate crude futures fell 0.39 per cent to $71.20.

China, Japan, and South Korea To Jointly Respond To US Tariffs

China, Japan, and South Korea have agreed to jointly respond to the US tariffs during their first economic discussions in five years on Sunday. The countries agreed that Japan and South Korea will import semiconductor raw materials from China, while China wants to procure chip products from Japan and South Korea.

Trump Tariffs

Trump has for weeks trumpeted April 2 as a "Liberation Day" that will see dramatic new duties that could upend the global trade system. Treasury Secretary Scott Bessent told Republican House lawmakers that the reciprocal tariffs Trump will announce represent a "cap" of the highest US tariff level that countries will face and could go down if they meet the administration's demands, according to Republican Representative Kevin Hern from Oklahoma.

Trump has already imposed tariffs on aluminum and steel imports and has increased duties on all goods from China. But he has also repeatedly threatened to impose other tariffs, only to cancel or postpone them.