On April 2, 2025, President Donald Trump is set to make a highly anticipated announcement regarding a series of new "reciprocal tariffs" at a special event dubbed "Liberation Day." This proclamation is expected to significantly impact the U.S. economy and its trading relationships with various countries. White House Press Secretary Karoline Leavitt confirmed that the tariffs will take effect immediately following the announcement, which is scheduled for 4 PM ET in the Rose Garden during a "Make America Wealthy Again" event.
For months, Trump has been hinting at this day, which he claims will mark a turning point for America. "My understanding is that the tariff announcement will come tomorrow," Leavitt stated on April 1, adding that the new tariffs will be enforced without delay. The specific details surrounding the tariffs remain somewhat vague, but they are expected to target countries that impose tariffs and non-tariff barriers on U.S. exports.
In the lead-up to the announcement, the stock market has been experiencing heightened volatility, with investors expressing concern over how these tariffs may influence both domestic and global economies. On April 1, the S&P BSE Sensex and the NSE Nifty50 indices plunged more than 1.5%, closing down nearly 1,400 points and 353 points, respectively. This marked one of the worst starts to a new financial year in five years, as traders reacted to the uncertainty surrounding Trump's impending tariffs.
Market analysts are closely monitoring the situation. Devarsh Vakil, Head of Prime Research at HDFC Securities, noted that the Nifty index has completed a 38.2% retracement of its recent rise, indicating potential further declines if it fails to hold above critical support levels. "A sustained level below 23,141 could drag the index towards the next support at 22,917," he warned.
As investors await the tariff announcement, global markets are reflecting mixed signals. For instance, while Japan's Nikkei index was down 0.28% and South Korea's Kospi fell 0.58%, Australia's ASX200 managed a slight gain of 0.2%. The uncertainty surrounding Trump's tariffs has left many investors on edge, with some opting to sell off stocks in anticipation of potential fallout.
Trump's tariffs are not entirely new; he has previously imposed levies on imports from Canada, Mexico, and China, as well as sector-specific tariffs on metals and automobiles since taking office in January 2025. This latest round is expected to be broader in scope, potentially affecting a wider array of countries and goods.
At the heart of Trump's tariff strategy is the idea of reciprocity. According to reports, the administration is considering a customized reciprocal plan that would apply exclusive rates to countries based on their existing tariffs and trade barriers. This could lead to a complex web of tariffs that might further complicate international trade relations.
Experts are divided on the implications of these tariffs. Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley, suggested that the announcement might serve as a starting point for further negotiations rather than a definitive resolution. He remarked, "Policy uncertainty and growth risks are likely to persist - it's a question of to what degree." Meanwhile, Trump has indicated a willingness to negotiate with countries to avoid tariffs, suggesting that the situation remains fluid.
As the market braces for Trump's announcement, several companies are in the spotlight due to their potential exposure to the tariffs. Shares of major firms like Maruti Suzuki, Tata Motors, and Coal India are expected to be affected as investors react to the news. Maruti Suzuki reported a 16.9% increase in production in March, while Tata Motors showed marginal growth in sales.
In the backdrop of these developments, the price of gold has also surged, reaching record high levels of $3,160 an ounce as investors flock to safe-haven assets in light of the impending tariff announcements. This reflects a broader trend of caution among investors, who are concerned about the potential economic repercussions of the tariffs.
Looking ahead, analysts suggest that the market will likely remain volatile as traders adjust their strategies in response to the new tariff regime. Shrikant Chouhan from Kotak Securities emphasized the importance of monitoring key support and resistance levels in the coming days. "For day traders, 75,800 would be the key support zone. If Sensex manages to trade above this level, we could expect a pullback rally to 76,500 - 76,650," he noted.
As the clock ticks down to Trump's announcement, the business community and investors alike are left to ponder the potential ramifications of the new tariffs. Will they lead to a trade war or foster better negotiations? Only time will tell.
