Global stock markets fell sharply on Monday after the United States President Donald Trump hinted that new tariffs would hit all countries. While Trump, forever the showman, has not disclosed what that means, markets have been preparing for the worst-case outcome.
Treasury has identified the “Dirty 15” — countries with the largest goods imbalances with the US — as possible early tariff targets. This group includes China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada and India.
Given that the ASX200 shed $50 billion following the first tariff announcement in February 2025 - its worst fall since September 2024 – it is hardly surprising that investors are rattled by tomorrow’s tariffs 2.0.
Since trading at 8555 points on 14 February, the ASX has fallen 7% to 7955.
Uncertainty reigns
While a lack of clarity has fuelled market swings and kept investors guessing, the Washington Post reported that a 20% blanket tariff on most imports is under consideration.
US officially stated that the measures will take effect “immediately” once announced.
At the epicentre of Trump’s tariff announcements, the U.S., the S&P 500 is down 4.6% for the first quarter, while the Nasdaq has slid over 10%.
One measure of heightened investor anxiety is the VIX Index, which surged 28% in Q1 to a peak of 24.80 before easing slightly to 22.28 – the long-term average is 19.5.
Recession risks are rising
While few if any commentators in Australia are using the R word, Matthew Sherwood, Head of Investment Strategy at Perpetual, believes there absolutely no doubt recession risks are rising.
“I would argue the likelihood is now in excess of 30% and the key factor in the near term will be April 2,” Sherwood told media.
Tariffs 2.0 are also a growing source of unease for Reserve Bank (RBA).
While Governor Michele Bullock doesn’t expect Australia to dip into recession in the coming year, she recently noted that higher prices make it tougher to keep a lid on inflation.
Could ‘liberation day’ for the US ignite global turmoil?
Meanwhile, there’s growing speculation in the U.S. that new tariffs of up to 20% on most imported goods - totalling roughly US$3 trillion ($4.8 trillion) annually - which Trump has dubbed “Liberation Day” could send shockwaves through the global economy.
By comparison, Trump’s first-term tariffs covered around US$380 billion in imports.
In a worst-case scenario, Moody’s Analytics chief economist Mark Zandi fears Trump’s tariffs 2.0 could trigger a year-long U.S. recession, lift unemployment above 7% and wipe out over five million jobs.
However, there’s a caveat; Zandi suspects that this outcome is only predicated on full retaliation from trading partners.
So how are global economies responding? At first blush the answer is yes.
Trading partners have already begun to respond. The E.U. has announced counter-tariffs on $28 billion of U.S. goods, set to take effect mid-April.
China has also imposed additional duties on U.S. agricultural products, while Canada has levied retaliatory tariffs on US$20 billion in imports.
Inflationary pressures
Based on The Tax Foundation's numbers, tariffs would cost U.S. households an average of US$2,045 annually.
Then there’s the Office of the United States Trade Representative which listed Australia’s biosecurity laws, pharmaceutical patent protections, media bargaining code, screen quotas, and investment restrictions as among U.S. trade concerns ahead of the announcement.
According to the Yale Budget Lab, a 20% tariff on all imports could raise inflation by over 2% and reduce household purchasing power by between US$3,400 and US$4,200 annually, even before retaliation is accounted for.
The effective U.S. tariff rate would rise to 32.8% — the highest since 1872.
Stocks trading at 52-week highs
Investors concerned about the impact of tomorrow’s tariff updates by Trump may wish to consider some profit-taking today.
The following stocks have recently reached their 52-week highs.
Koonenberry Gold (ASX: KNB) up 188% in one year.
Metal Hawk (ASX: MHK) up 573% in one year.
Marvel Gold (ASX: MVL) up 55% in one year.
Aspen Group (ASX: APZ) up 79% in one year.
Great Boulder Resources (ASX: GBR) up 34% in one year.
Native Mineral Resources Holdings (ASX: NMR) up 352% in one year.
Barton Gold Holdings Ltd (ASX: BGD) up 45% in one year.
ROX Resources Ltd (ASX: RXL) up 101% in one year.
Medibank Private Ltd (ASX: MPL) up 20% in one year.
Betashares Global Defence ETF (ASX: ARMR) up 31% in one year.
Telstra Group Ltd (ASX: TSL) up 12% in one year.
SG Fleet Group Ltd (ASX: SGF) up 19% in one year.
