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Investors are shaken today after the Trump administration imposed a 10% baseline tariff on global imports, and higher rates for 60 other countries including China at 34% (bringing the total tariff rate to 54%), the EU at 20%, and India at 26%. The 10% baseline tariffs go into effect April 5 and the higher rates on individual countries go into effect April 9. Also, the 25% tariffs on all foreign-made automobiles takes effect today. See earlier InPlay posts for details.

• The stock market actually traded higher yesterday ahead of the announcement as investors hoped the stock market sell-off in recent weeks would persuade President Trump to go easy on his tariff decision. However, the tariffs were higher than people had been expecting and that's why the market is selling off today.
• The purpose of the tariffs is to bring manufacturing back to the US and that is a laudable goal. However, that typically takes years and companies may be hesitant to repurpose billions of dollars when the tariff policy could change. The administration has changed its mind often in the opening weeks of this term. Declaring tariffs, then cancelling them or changing the percentage, sometimes in the same day. It makes it difficult for businesses to plan.
• We suspect some businesses will move some manufacturing back to the US, but even if they do, their input costs are still going to rise and the US consumer is not really in a buying mood so it may not be worth it. Others may just wait it out. Their thinking is that maybe a possible recession and a weak stock market could persuade the administration to claim some sort of a victory and change course. Or they may just wait for a new presidential term. Tariffs are unpopular and rolling them back will likely be a key rallying cry in the 2026 mid-terms and the 2028 presidential cycle.
• Looking ahead, the big concern is that these moves will fuel a trade war with China, Europe, Canada etc. Also, in the US, consumers have already been feeling the pinch on inflation, but these tariffs are likely to fuel inflation even further. The pain is likely to be felt most deeply by lower income consumers. Also, with 401Ks lower, US consumers are likely already feeling less secure and more uneasy about spending.
• Treasury Secretary Scott Bessent said in a Bloomberg interview that these tariffs are the "high water mark" unless countries retaliate. He is taking a "wait and see" approach to trade talks with other countries. As such, there is hope that some negotiations could be fruitful and perhaps tariffs could be reduced at some point.

Many investors are understandably disheartened today with the market under pressure, but we suspect this will be an evolving situation over the coming weeks and months. We really look forward to getting some commentary from companies about the tariffs when earnings season kicks off in a few weeks. We suspect guidance could be pretty weak for many companies.