Market Overview

Wednesday, April 2, 2025 – U.S. and Canadian stock markets opened lower as investors braced for the Trump administration's highly anticipated tariff announcement scheduled after the market close.

• S&P 500, Nasdaq, and TSX all declined in early trading.

• Technology, energy, and consumer discretionary stocks were among the biggest losers.

• Bond yields fell, with the 10-year U.S. Treasury yield dropping to 4.14% and the 10-year Canadian Government yield at 2.9%.

• European markets were in the red, while Asian markets closed mixed.

• The U.S. dollar weakened against major international currencies.

U.S. Employment Report: Stronger Than Expected

The ADP U.S. employment survey indicated stronger job growth in March, suggesting a resilient labor market:

• Private sector employment grew by 155,000, surpassing estimates of 122,000.

• Largest sector gains:

  • Professional and business services: +57,000 jobs

  • Financial activities: +57,000 jobs

  • Manufacturing: +21,000 jobs

• February’s employment figure was revised upward by 7,000.

• Annual wage growth rose 4.6% year-over-year.

U.S. Manufacturing Activity Exceeds Expectations

• New orders for U.S. manufactured goods rose 0.6% in February (vs. 0.5% expected).

• Durable goods orders increased 0.97%, slightly above forecasts of 0.9%.

• These figures suggest a potential recovery in the U.S. manufacturing sector, supporting broader economic growth.

Trump Announces ‘Baseline Tariff’ of 10%

In a dramatic move, President Trump unveiled a sweeping new tariff plan aimed at imposing broad reciprocal duties on trade partners, calling it "Liberation Day."

• A baseline tariff of 10% applies to all U.S. trade partners.

• Additional higher tariffs include:

  • European Union: 20%

  • China: 34%

  • Vietnam: 46%

  • Japan: 24%

• Trump stated that tariffs would be "half" of what they could have been.

• The administration is also imposing 25% tariffs on all foreign-made vehicles this week.

Global Trade War Escalation: Country-Specific Tariffs

• Steel & Aluminum Tariffs

  • The U.S. enacted a 25% tariff on steel and aluminum imports on March 12.

  • The EU responded with $28 billion in counter-tariffs, with some tariffs (including 50% on U.S. whiskey) delayed until mid-April.

• Canada & Mexico

  • A 25% across-the-board tariff took effect on March 4.

  • The U.S. paused tariffs on USMCA-compliant goods until April 2.

  • Canada retaliated with $20 billion in tariffs on U.S. goods.

• China

  • The U.S. imposed a new 20% tariff on top of existing 10% duties.

  • China retaliated with 15% tariffs on U.S. farm goods (chicken, pork) starting March 10.

• Venezuela

  • A secondary tariff will go into effect on April 2.

  • Any country buying oil or gas from Venezuela will face a 25% tariff when trading with the U.S..

Market Reactions & Investor Sentiment

• Stock futures plunged overnight as investors assessed the impact of escalating trade tensions.

• Commodities like WTI crude oil declined, as markets feared tariffs would dampen global economic growth and energy demand.

• Investors are closely watching the White House event to gauge the full extent of the tariffs.

Conclusion

The new tariffs represent one of the most significant trade policy shifts in recent years, with broad implications for global markets.

Investors should monitor upcoming economic reports, including the March nonfarm payrolls report, to better understand the labor market’s resilience amid rising trade tensions.

References

1. U.S. Treasury Yield Data: https://www.treasury.gov

2. ADP Employment Report: https://www.adpemploymentreport.com

3. U.S. Durable Goods Orders: https://www.census.gov/economic-indicators

4. White House Tariff Announcement: https://www.whitehouse.gov

5. U.S. Department of Commerce Trade Policy: https://www.commerce.gov

6. Federal Reserve Economic Data (FRED): https://fred.stlouisfed.org

7. European Commission Trade Policy: https://ec.europa.eu/trade/

8. China Tariff Retaliation Policy: http://www.mofcom.gov.cn

9. Canada & Mexico Tariff Announcements: https://www.fin.gc.ca

10. Venezuela Tariff Impact Analysis: https://www.eia.gov

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Tariffs Rattle Global Markets