Global stock market today: Dow Jones Futures decline; how Trump tariffs may impact the US stock market?

Global stock market today: On expected lines, US stock futures declined sharply on Wednesday after President Donald Trump announced global reciprocal tariffs- a move is feared to trigger a major trade war.

Dow Jones Futures dipped about 1.5 per cent following tariff announcements, reflecting the market’s nervousness about the potential economic fallout of Trump’s tariff moves.

Meanwhile, major Wall Street indices ended higher on April 2 ahead of US President Donald Trump’s reciprocal tariff announcements in hopes that tariffs would be milder and that there would be countries and product-specific exclusions.

Nasdaq closed 0.87 per cent higher, while S&P 500 and Dow Jones climbed 0.51 per cent and 0.62 per cent, respectively.

Trump announced tariffs on all major trade partners of the US, including China, European Union, Taiwan, Japan and India. He said he would impose a 10 per cent baseline tariff on all imports to the US effective April 5 and higher duties on some of the country’s biggest trading partners.

Track All Donald Trump Tariff Announcements Here

Trump said the tariffs will not be fully reciprocal but approximately half of what they are.

“We will charge them approximately half of what they are and have been charging us. So, the tariffs will be not a full reciprocal,” he said.

Trump imposed 26 per cent reciprocal tariffs on India, 34 per cent on China, 20 per cent on the EU, and 24 per cent on Japan.

Besides, he also confirmed his plan to 25 per cent tariffs on automobiles, a move which could impact countries like Japan and Korea significantly.

Trump tariffs: How it could impact US markets?

The market could see an immediate negative reaction to tariff announcements, as indicated by Dow Jones Futures, due to concerns that tariffs could drive up inflation in the US and could weigh on economic growth.

Higher inflation could also result in delayed rate cuts by the US Federal Reserve, which is another key negative for the markets.

Some experts believe the tariffs are higher than anticipated, which could roil market sentiment.

“Markets were anticipating a good, bad or an ugly scenario on tariffs, and this reciprocal tariff is leaning more into the ugly scenario, meaning that the total amount of tariff when you average out is slightly higher than what was anticipated,” Reuters reported Brian Mulberry, portfolio manager at Zacks Investment Management, saying so.

However, Trump announced reciprocal tariffs at only half the rate that other countries impose on US products, leaving room for negotiation rather than retaliation.

Investors would focus on whether US trading partners announced counter-tariffs. This could trigger a deeper trade war, which would significantly negatively impact the world’s growth-inflation dynamics.

“Markets are going to continue to struggle with the speed at which tariff details change as well as the ultimate result of the tariffs themselves,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

“The silver lining for investors could be that this is only a starting point for negotiations with other countries, and ultimately tariff rates will come down across the board – but for now, traders are shooting first and asking questions later,” Zaccarelli said.

(With inputs from Reuters)

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