Financial markets have faced increased volatility in recent days as investors react to the latest round of tariffs announced by President Trump. The situation is expected to escalate further as an April 2 deadline approaches, a date Trump has labeled “Liberation Day,” raising concerns over potential retaliatory measures from key trading partners.
A central question for investors is the extent of the upcoming tariffs and whether they will trigger an intensified trade conflict.
“The market will have a lot to digest,” said Henrietta Treyz, director of economic policy at Veda Partners, in an interview with Yahoo Finance. “And they’re going to see just how forward-looking and long-term these tariffs are, which is not currently priced in.” 
Ajay Rajadhyaksha, global chairman of research at Barclays, emphasized the significance of Trump’s recent 25% tariff on foreign-made vehicles, describing it as a “bigger deal than the market is making it out to be.”
“It is a statement of intent,” Rajadhyaksha stated. “And at least in my mind, it raises the risk that April 2 is something markets cannot dismiss. I think we will be negatively surprised.”
Market Uncertainty and Economic Risks
The prevailing concern among investors is that unexpected tariff increases could further dampen market sentiment and potentially slow economic growth. Several leading Wall Street firms have already revised their year-end targets for the S&P 500 in response to ongoing trade uncertainties.
Goldman Sachs strategist David Kostin recently reduced his target for the second time in March, lowering it from 6,200 to 5,700. Barclays also revised its projection downward, from 6,600 to 5,900.
Should the final tariff rate exceed Barclays’ estimate of approximately 15%, analysts warn of increased downside risks, with the possibility of economic contraction. Rajadhyaksha has advised clients to adopt a defensive investment strategy amid the heightened uncertainty.
“We are as defensive as I can remember in the last two and a half years,” Rajadhyaksha told Yahoo Finance.
Goldman Sachs’ economists also anticipate a market reaction to the downside. According to the firm’s chief political economist Alec Phillips, a recent survey of market participants suggests they are expecting a reciprocal tariff rate of about nine percentage points. However, Phillips and his team believe the administration’s initial proposal will be significantly higher—potentially double the market’s expectations.
“Administration officials have explicitly stated that the soon-to-be-announced tariff rates are intended as a basis for negotiation, incentivizing them to propose higher rates initially,” Phillips wrote. “This pattern was evident in previous tariff negotiations with Canada and Mexico, where steep rates were introduced but later scaled back.”
Potential Market Stabilization
Despite concerns over tariff escalations, some analysts believe that greater policy clarity could ease market pressures.
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, noted that uncertainty surrounding trade policy has been a major factor driving recent market declines.
“It should take some pressure off the market,” Tentarelli told Yahoo Finance. “I think the biggest concerns have been not only the tariffs themselves but the uncertainty surrounding them. If we gain some clarity on the tariff picture, the market may interpret that as a positive signal, and we could see an upward move from there.”
As the April 2 deadline approaches, investors will closely monitor any developments, with the potential for significant market shifts depending on the administration’s final tariff decisions.
