Trump’s Trade War Will Make Things Worse: Barron’s Daily

This quarter has been turbulent for financial markets, but investors should brace for even more volatility as a global trade war looms.

Despite growing trade tensions, economic indicators suggest resilience in the U.S. labor market—for now.

The S&P 500 has fallen 3.2% so far this year, putting it on track to break a five-quarter winning streak. It would be the index’s worst start to a year since 2022, when it fell 5% in the first quarter and ended the year 19% lower, Callum Keown reported for Barron’s Daily.

That comparison paints a gloomy picture, but those hoping for a calmer start to the next quarter may be disappointed. Market turbulence is expected to escalate as President Donald Trump unveiled a new round of tariffs on April 2, which he has declared "Liberation Day."

Trump’s reciprocal tariffs are set to target multiple countries, but global retaliation could be even more concerning for markets.

His auto tariffs have already provoked strong responses from world leaders, increasing the risk of an escalating trade war.

Canadian Prime Minister Mark Carney stated that “nothing is off the table” in response to the tariffs, while Mexico’s President Claudia Sheinbaum promised an “integral response." Japan and the European Union are also weighing their next moves.

Trump has warned that if the EU and Canada coordinate their retaliation, he will impose even steeper tariffs.

This tit-for-tat escalation could have serious consequences. Inflation expectations are rising, and Friday’s core Personal Consumption Expenditures (PCE) index—the Federal Reserve’s preferred measure of inflation—could offer key insights into the broader economic impact.

Despite growing trade tensions, economic indicators suggest resilience in the U.S. labor market—for now. Weekly jobless claims fell last week, contradicting expectations that layoffs would rise ahead of a potential recession.