STOCK/MARKET Alert 4.2.2025 ….TARIFFIED on “Liberation Day”

My Stock/Market Alert is an event driven brief about a stock OR the market when noteworthy action occurs. Today’s alert is due to today’s worse-than-expected “Liberation Day” Trump tariff plan announcement.

Expect the frequency of my Stock/Market Alert notes to be consistent with meaningful moves in a specific stock held by BAM Portfolios or the stock market in general.

Welcome to “Liberation Day”. Liberation means freeing. Investors were hoping today’s President Trump’s announcement of his tariff plans would free them from uncertainty and deliver clarity that might ease global market volatility. Nothing liberating could be taken from Trump’s speech for investors.  Trump’s tariff talk today has created more uncertainty and increased volatility. There was a sudden swing in stock market after-hour trading while the president spoke from the White House Rose Garden. The overnight futures market indicated a 1% gain in the SP 500 and 2% for the Nasdaq, then in a blink flipped over to a loss in both indices – to -2% for SP 500 and -3% for the Nasdaq.

The market plunged as Trump  unveiled “reciprocal” tariffs vs. the world that were much higher than investors had feared. He also announced a 10% baseline on all imports worldwide. The president’s bite now seems worse than his bark. Apparently, the reciprocal tariffs will be added on top of tariffs on autos, steel, aluminum and other targeted industries. That means that China faces a 54% average tariff, including on Apple iPhones. Autos imported from the EU would face a 45% tariff. Trump will continue to exempt USMCA-compliant goods from the 25% tariffs imposed on Canada and Mexico. Trump said he won’t impose “reciprocal” tariffs on Canada and Mexico for now. It could be that today’s tariff announcement was worse than the worst-case scenario. The plan imposes steep tariff rates on many countries, including 34% on China, 20% on the European Union, 46% on Vietnam and 32% on Taiwan. The tariff rate on Beijing comes in addition to existing 20% tariffs on Chinese imports, means the true tariff rate on China is 54%?!   More than 180 countries and territories will face under his sweeping new trade policy.

Here’s Reciprocal Tariffs chart President Trump unveiled today:

As I write this, the Dow has tumbled 1,000 points in the futures market. Fear of a negative trade war are weighing on investors. Shares of multinational companies are plummeting in extended trading. Nike and Apple each dropped about 7%. Shares of big sellers of imported goods were among the hardest hit. Five Below lost 15%, Dollar Tree tumbled 11% and Gap plunged 8.5%. Tech shares dropped in an overall risk-off mood, with Nvidia off 4.5% and Tesla down 6%. The “growth scare” in causing what appears to be heading towards capitulation.

As noted often during the “Covid Crash”, the stock market’s biggest single up-days occur during corrections and bear markets. So, today’s rally should not be a surprise. Also, expect more market volatility as we head into the close of Q1. Historically, Q1 weakness has occurred regardless of how strong or weak the month of March has been. Globally, markets are falling in response to Trump’s tariffs. The Vietnam stock market is in a steep 10% fall now in the face of 46% tariffs on the country.

Liberation. No. Not from uncertainty or volatility. Markets now will speculate what the impact of retaliatory tariffs may have on the global economy. Economists fear that adding tariffs on imported goods will push up US inflation as importers pass on costs to customers, and also hurt confidence. We will likely hear more fear of recession in the U.S. The most dismal will point to the risk of stagflation in our economy. The continued uncertainty volatility is likely to me affected by Trump himself. Will he change his mind? Will exceptions be offered? Is today only a starting point? How much room for negotiation has the the author of “The Art of The Deal” allowed?

“Liberation Day” may have given us more unknowns than knowns about the outcome on Trump’s tariffs. We do know what to do and NOT do: stay disciplined, stick with a suitable investment plan, don’t panic – control emotions, remain diversified and listen to the market for direction, not what people say about the market. With elevated volatility come opportunity.

Prudent and proper portfolio management is critical now, as always.