Trump’s crucial tariff announcement looms large - what’s moving markets

Published 02/04/2025, 08:56
© Reuters

Investing.com - "Liberation Day" is here. U.S. President Donald Trump is tipped to unveil a batch of new tariffs on Wednesday, which some believe could upend the longstanding rules-based global trade order. U.S. stock futures point lower, while gold lingers around record highs, as many of the details of Trump’s announcement remain largely unknown.

1. Trump "Liberation Day" tariff announcements loom large

Investors were bracing for the impact of Trump’s impending tariff announcements on Wednesday.

Trump is due to reveal the levies at a Rose Garden event at 16:00 ET (20:00 GMT), although many of the details of the pronouncements remain unclear.

A White House spokesperson has said the duties would come into effect immediately after Trump unveils them, followed by new 25% tariffs on cars -- which were announced last week -- on April 3. The levies would stack on top of previous trade taxes placed on steel and aluminum and on Chinese goods.

Trump has made tariffs a centerpiece of his second term in office, arguing that these moves are necessary to correct trade imbalances, lift government revenues, and reshore lost manufacturing jobs. Trump has previously backed so-called "reciprocal" tariffs that would match foreign charges and non-trade barriers on U.S. exports.

However, many economists have warned the actions could push inflation higher and weigh on growth, potentially plunging the U.S. economy into a recession.

Businesses have also flagged worries over the lingering uncertainty around the policy changes, noting that the murky outlook may affect spending and hiring plans. Some analysts have suggested that today’s tariffs, which Trump has deemed "Liberation Day," will provide much-needed clarity for markets; more bearish observers have said the latest slew of levies may be harsher than many anticipate.

2. Futures edge lower

U.S. stock futures hovered just below the flatline, in a note of market caution ahead of the tariff announcements.

By 03:41 ET, the Dow futures contract had inched down by 64 points or 0.2%, S&P 500 futures had slipped by 14 points or 0.2%, and Nasdaq 100 futures had dropped by 62 points or 0.3%.

The main averages on Wall Street ended mostly higher on Tuesday following a bout of choppy trading, with investors attempting to position themselves ahead of Trump’s event on Wednesday afternoon. Measures of stock, bond and currency volatility have recently increased as tariffs cloud the economic outlook.

“The swash-buckle tone being adopted by the Trump administration now generates more apprehension than confidence,” analysts at ING said in a note.

Sentiment was also dented by data points on Tuesday showing that U.S. manufacturing activity contracted in March, while job openings decreased slightly — but were broadly steady — on the last day of February.

The benchmark S&P 500 and tech-heavy Nasdaq Composite both eked out small gains. The blue-chip Dow Jones Industrial Average fell.

3. Gold eases from record levels

Gold prices inched down on Wednesday after hitting an all-time high in the previous session, bolstered by ongoing safe-haven demand with investors still awaiting specific details on Trump’s tariffs.

Spot gold edged 0.2% lower to $3,118.73 per ounce by 03:42 ET, after rising by 0.4% in early Asian trading.

The yellow metal had hit consecutive fresh peaks in the last four sessions, but traders were cautious on the day of Trump tariffs, leading to increased volatility on Wednesday.

4. Dollar, Bitcoin steady

The U.S. dollar index and dollar index futures steadied, with markets squarely focused on Trump’s plans for reciprocal tariffs against major U.S. trading partners, as well as his plans to impose universal tariffs on all U.S. imports.

A report from the Washington Post said Trump was considering imposing duties on roughly 20% of imports coming into the country, while CNBC reported that Treasury Secretary Scott Bessent told lawmakers that the U.S. president will impose the highest possible reciprocal tariffs on major trading partners.

In cryptocurrencies, Bitcoin advanced marginally, yet traders were largely risk-averse. The world’s largest cryptocurrency has staged a muted rebound this week after clocking steep losses in the first quarter of 2025. But this recovery remained fragile in the face of increased economic ructions under Trump.

5. Oil inches down

Elsewhere, oil prices moved down slightly, with traders taking some caution before Trump’s tariff announcement later in the day.

Markets were also awaiting a meeting of the Organization of the Petroleum Exporting Countries and its allies -- known as OPEC+ -- later this week, where the oil group is reportedly considering plans to further increase production.

Crude prices notched some gains over the past week after Trump threatened Russia with more oil sanctions and threatened military action against Iran over a nuclear deal.

Traders attached a greater risk premium to oil, while also betting that supplies could be disrupted by Trump’s actions.

But bigger increases in crude were limited by concerns that Trump’s policies could disrupt global growth and hit crude demand.

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