Markets nervous as Trump’s trade announcement approaches


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Investors are bracing for heightened market volatility as U.S. President Donald Trump’s April 2 tariff policy announcement approaches, though many doubt it will provide the clarity markets desperately seek.

While 2025 began with investor optimism about Trump’s pro-growth agenda, the stock market has struggled since his inauguration. The S&P 500 has experienced significant swings due to tariff-related news, falling as much as 10% this month and heading toward a 5% decline for the first quarter – its worst quarterly performance since 2020.

“I’m an eternal bull, but I would tell you that I think that between now and next week, and certainly the beginning of earnings season, I think there’s more potential downside than upside right now,” Mark Malek, Chief Investment Officer at Siebert Financial said.

Market tensions intensified Friday as the index dropped roughly 2% following reports of increased consumer spending amid rising prices, highlighting investors’ concerns about Trump’s trade policies potentially fueling inflation.

The upcoming announcement is expected to detail which countries and sectors will be targeted in the administration’s efforts to address a $1.2 trillion global goods trade deficit. Market experts anticipate significant price fluctuations based on various factors, including tariff rates, duration, targeted regions, and potential retaliatory measures.

“Uncertainty has continued to plague the market with volatility,” said Michael Arone, chief investment strategist for State Street Global Advisors.

“There is potential for more volatility on April 2 and post that deadline,” Arone said.

International tensions escalated Thursday when global allies threatened retaliation after Trump announced a 25% tariff on imported vehicles, sending automotive stocks tumbling.

Angelo Kourkafas, senior investment strategist at Edward Jones, suggests the April 2 announcement won’t resolve all market uncertainties, calling it “not a one-and-done event.”

“It is an important milestone, but at the end of the day, it doesn’t completely really clear out all the uncertainties that potentially still remain,” Kourkafas said.

Market response will largely depend on implementation timing and potential international retaliation, according to Matthew Aks of Evercore ISI. Major financial institutions have already adjusted their forecasts, with Barclays reducing its S&P 500 target to 5,900 from 6,600, while UBS Global Wealth Management lowered its projection to 6,400.

Some analysts see potential upside if the announced measures prove less severe than feared. Jamie Cox of Harris Financial Group views potential weakness as a buying opportunity, while others anticipate a shift toward more market-friendly policies like tax cuts.

“I think they’re going to start shifting gears and move from tariffs,” Robert Pavlik, senior portfolio manager at Dakota Wealth, said.

Historical precedent shows markets can recover from trade-related setbacks. During Trump’s first term, the S&P 500 recovered from an 18% decline within three months as trade tensions eased. However, recent consumer confidence data hitting four-year lows suggests growing concerns about recession risks and inflation due to tariffs.

The market’s current nervousness stems primarily from fears about tariffs’ potential economic impact, according to John Canavan at Oxford Economics. While investors hope for clarity from the upcoming announcement, many remain skeptical about whether it will provide the reassurance markets need to move higher.

“Getting greater clarity will allow markets to move higher,” State Street’s Arone said.

“I am still skeptical that will get that clarity … we are hoping for it, but we will see,” he said.

 

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