Weekly Economic Report 4.4.25

The die is cast and President Trump’s tariffs have been levied – at much higher levels than expected in even the worst-case scenario. China now faces 54% in new tariffs added this year on top of whatever product specific levies existed before. Europe saw tariffs rise 20%. Japan and South Korea, 24% and 25%, respectively. The financial markets reacted violently with a steep 10% sell-off in the S&P500 over two days, one of the largest declines in history. Nor were equity markets around the world spared, with deep declines everywhere given the global impact of the announcement. Ten-year notes plunged to 3.85% in the initial rush for security, but settle back to 3.99% late Friday. The dollar also weakened as funds exited the US. China retaliated immediately with 34% in new tariffs across the board. Canada’s new Prime Minister Mark Carney responded with 25% tariffs on autos not exempted under USMCA. Others, like Vietnam, are calling the President. He has indicated higher tariffs for those that retaliate and negotiations for those that talk. Areas not covered by this round – like pharmaceuticals – will be the subject of future announcements.

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