The News
US stocks suffered their worst quarter in almost three years ahead of President Donald Trump’s announcement of sweeping tariffs on April 2, after he suggested the levies could apply globally.
“You’d start with all countries, so let’s see what happens,” Trump told reporters on Air Force One on Sunday. Last week, he suggested that concessions could be made for some countries.
The S&P 500 dropped 4.6 per cent in the first three months of 2025, with one investor from US bank Jefferies telling The Financial Times: “I don’t think any of us expected the kind of continued headline noise [and] the lack of clarity on how the administration will go about achieving its goals.”
Investors raced to buy haven assets ahead of the sweeping levies — reciprocal tariffs as well as duties on steel, aluminum, and cars — coming into force.
Goldman Sachs slashed its projection for US growth this year, and raised its inflation forecast, estimating the likelihood of a recession in the next 12 months at 35%, while Axios said analysts are now beginning to worry about “Wall Street’s least-favorite ‘s-word,’ stagflation.”
SIGNALS
Trump’s tariff goals are manifold — and contradictory
Donald Trump has long touted tariffs as a way to push companies to invest more in the US and promote American businesses. He has also positioned them as a revenue source for the government, while some conservative lawmakers see them as a means to force other countries to grant concessions. “Trump, for now at least, appears to be trying to demonstrate that tariffs can accomplish several goals simultaneously,” The Washington Post wrote. An economist with a center-right think tank, though, noted that “several of these stated goals are in contradiction with each other… You can’t have a tariff for everything and everyone — in time, they will have to reveal what the real purpose is.”
Uncertainty runs the gamut, from Wall Street to Midwest farms
The questions swirling around the tariffs — from what goods they will affect to how governments and companies respond, to how prices will change — has permeated the economic ecosystem. Markets are bracing for volatility after April 2 while analysts have warned of high-level impacts: “The uncertainty alone is going to drag on growth,” a Deutsche Bank economist said. In some communities where agriculture is the dominant industry, tariffs are the dominant topic of discussion, Minnesota paper The Mankato Free Press wrote. Fears range from a consumer spending slowdown to diminished exports. “There is an uneasiness in the farm community because of the uncertainty,” one local farmer said. “I’m sympathetic to the America First agenda… But I don’t want it to become America Alone.”
Globalization may not be fully threatened
Despite many analysts’ fears that Donald Trump’s tariffs will prompt the world’s markets to put up their own barriers, “Trump 2.0 will not be a fatal blow to international trade,” the Financial Times’ Tej Parikh argued. The US is influential, but it alone can not reverse globalization; Europe and China are larger contributors to global trade growth, and a US retrenchment would only spur other countries to fill the gap, Parikh wrote. Asset manager PGIM defined the current moment as a “dual-track era,” in which national security-related sectors are deglobalizing — for example, artificial intelligence, chips, minerals, military tech — but the less flashy goods and services sectors, which make up 75% of the global economy, are still globalizing at high speed.