‘Scary Breakdown’? Brokerage Warns Of Market Impact Ahead Of Donald Trump’s Tariffs

As tariff threats loom large on the world, investors are slowly but steadily starting to get some clarity on Trump administration's tariff plans, but the financial markets remain on edge as there is little to no detail on what to expect.

Donald Trump, the President of the United States has pegged April 2, 2025 as "Liberation Day" as this is the day when his administration will impose an array of new tariffs that could not just affect the trade system but also trigger a potential trade war.

As a result, investors who had kicked-off the year in high spirits with pro-growth policies from the Trump administration are spooked by the impending doom that tariffs might cause.

Where Do Investors Stand?

Broadly, investors agree that the tariff announcement could be pivotal for the near-term outlook for global financial markets, but they are unsure of which way the prices will swing, a Reuters report said.

On Tuesday the White House confirmed that Trump will impose new tariffs on Wednesday, without giving away details about the size and scope of trade barriers that have caused businesses, consumers and investors alike to fret about a potential trade war.

Uncertainty Woes: Brokerage Comments

"I can't recall a situation where the stakes were this high and yet the outcome was so unpredictable," said Steve Sosnick, the Chief Strategist at Interactive Brokers.

"The devil is going to be in the details and nobody knows the details," he added.

The S&P 500 Index's intra-day moves have expanded toward the high end of its recent range as investors have grown more nervous ahead of the tariff announcement from Trump.

There is a lack of clarity on whether there is going to be one flat tariff or if the administration is taking a more fragmented approach. Due to this, modelling the ultimate impact of tariffs on earnings, growth and inflation has become a daunting challenge.

The S&P 500 confirmed a correction or a drop of 10% from a recent high, in Mid-March when the index was last down about 8% from its February record high.

Sosnick added, "We are at a very tenuous spot, being at the bottom of a corrective trading range... that leaves us poised for either a very sharp bounce or a scary breakdown."

Also Read: Donald Trump's Tariffs On April 2: How Are Pakistan, Japan, UK, China Reacting To Them?