April 9, 2025: The Trump Tariffs Move Forward

President Trump’s first term began with market-friendly policies such as tax cuts and regulatory reform. Less market-friendly trade policies emerged later in his term. The market’s initial reaction to Trump’s reelection suggested that similar pro-growth policies would once again outweigh protectionist trade measures.

However, the second Trump administration has reversed that policy sequence, implementing the less market-friendly measures first. Since mid-February, the uncertainty surrounding these policies has weighed on investor sentiment; more recently, the scope of those policies has dampened market confidence. The so-called reciprocal tariffs announced last week—and enacted today—have raised the U.S. effective tariff rate from about 3% in 2024 to nearly 25%, a level not seen since in over 100 years.

As the stock market has shown over the past week, investors are generally skeptical that tariffs contribute to economic growth. Instead, the pass-through effects have prompted analysts to revise down their near-term expectations for both economic growth and corporate earnings. While we, along with others, expect that these tariffs will eventually be negotiated lower, the involvement of over 60 countries means the process will take time. Until then, economic uncertainty will linger, and market volatility is likely to remain elevated.

Weekly Market Update: April 9, 2025