Trump’s Tariffs Shake Markets—Time to Buy LEAPS Again?
President Trump shocked global markets on Wednesday with harsher-than-expected tariffs, sending stocks tumbling and oil prices crashing. The sweeping tariffs include a 10% levy on all imports, with significantly higher rates on select nations. China faces a brutal 34% tariff on top of the existing 20% duties, while the EU, Japan, and others will see rates ranging from 20% to 49%. These broad tariffs go into effect on April 5, with the country-specific hikes starting April 9.
Trump justified the tariffs by pointing to unfair trade practices and currency manipulation, stating that these measures would revitalize U.S. industries and reduce the national debt. However, analysts at Barclays noted the announcement was “more hawkish than expected,” particularly for China and Europe, warning that the uncertainty could worsen market conditions before improving.
Economic Risks & Market Reactions
Economists are already projecting that these tariffs could take a 10% hit on U.S. GDP in Q2 of 2025, with High Frequency Economics estimating a $741 billion loss in household incomes and corporate profits. That kind of economic pressure has already led to increased recession risks, especially with the Federal Reserve closely watching the fallout before making its next interest rate move.
The market reaction was swift:
- Apple (AAPL) dropped 7%, with Jefferies estimating a 14% net profit hit if it doesn’t secure a tariff exemption.
- Retail giants like Nike (NKE), Walmart (WMT), Dollar Tree (DLTR), and Gap (GAP) took heavy losses, as tariffs hit major production hubs in Vietnam, Indonesia, and China.
- Tech stocks like Nvidia (NVDA) and Tesla (TSLA) fell 4% premarket, with Tesla retracing some of its recent gains after reports surfaced that Elon Musk might step down from his government role.
Jobless Claims & Federal Reserve’s Next Move
While private payrolls beat expectations on Wednesday, JOLTS job openings came in weak earlier in the week. With the nonfarm payrolls report set for release on Friday, traders are closely watching for clues on labor market health.
The Federal Reserve is now in a tough spot. With tariffs increasing inflation risks, policymakers may hold off on aggressive rate cuts. However, UBS predicts that the Fed will eventually be forced to cut rates by 75-100 basis pointsby the end of 2025 to counteract slower economic growth.
Crude Prices Plummet
Oil prices tanked Thursday as fears of slowing global growth hit demand expectations.
- Brent crude fell 4.1% to $71.86 per barrel, its biggest single-day drop since early March.
- WTI crude futures fell 4.3% to $68.61 per barrel, deepening the energy sector’s concerns.
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