Tariff Shock Sends Global Markets Tariff Pause Lifts Markets, But Volatility Remains as Trade War Escalates

The Major Markets climbed mostly higher last week, recouping a significant amount of the year to date losses. The event that drove the gains higher was the announcement last week that President Trump would be pausing the reciprocal tariffs for 90 days on all countries but China. Instead, President Trump stated that the tariffs on China would be increased a further 125%. This increased the tit-for-tat trade war with China which ended with a total 145% tariff on all Chinese goods. China in return implemented a 125% tariff but said that they would be ignoring any further tariff increases.  

The president has stated from the beginning that the goal of these tariffs and ultimately the trade war was to reshore goods back to the United States. The challenge that China will have within this trade war is that the country is a net exporter of goods. The United States exports only $143B to China while imports $462B from China. This trade imbalance means that China is far more reliant on the United States as a buyer of their goods than the United States is as a sell to them. 

The result of this policy change was swift as it caused the S&P 500 to surge 9.5% Wednesday. The volatility continued Thursday as the market shed 3.46% and then added back another 1.8% to close out the week Friday. 

 

Major Markets		YTD as of 04/11/2025
	Nasdaq
	Dow Jones Industrial
	S&P 500
	MSCI World
	MSCI EM
	Russell 2000
	Bar US Agg Bnd

S&P Sectors		YTD as of 04/11/2025
	Comm. Services
	Cons. Discretionary
	Cons. Staples
	Energy
	Financials
	Health Care
	Industrials
	Info. Technology
	Materials
	Real Estate
	Utilities
		Agent/Broker Dealer Use Only

Volatility was also apparent in other segments of the markets. Gold saw prices surge last week taking the year-to-date return over 20% amidst the trade war. 

Treasuries also saw an eye-watering jump as the 7 to 20-year durations added just shy of 50 basis points last week. This hammered the overall bond markets downward. The Bloomberg Barclays aggregate bond index lost over 2.5% for the week, carving off most of the year-to-date gains. 

As bad as drawdowns are, it is important to keep these pullbacks in perspective. Looking back across history, intra year drawdowns are commonplace within the S&P 500, although the causes vary from year to year. Furthermore, the recent activity has really only pulled the S&P 500 back to its mid-August close. 

https://www.nytimes.com/2025/04/10/business/economy/china-tariffs-145-percent.html

https://truthsocial.com/@realDonaldTrump/posts/114309144289505174

https://tradingeconomics.com/united-states/exports-by-country

https://tradingeconomics.com/united-states/imports-by-country

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