By Joe Light
March 24, 2025, 12:12 pm EDT
Stocks rose following reports that the tariffs to be unveiled on April 2 won’t target all imports of goods in certain sectors. Above, the port of Long Beach in California. (FREDERIC J. BROWN/AFP via Getty Images)
The White House for a month has touted April 2 as a sort of D-Day for a U.S. pushback against other countries’ tariffs. President Donald Trump has called it “Liberation Day” for America against countries that export far more to the U.S. than they import from it.
Now, however, it looks like the administration is tamping down expectations for what will come on that date. Investors are breathing a sigh of relief.
On Sunday evening, multiple news outlets reported that the White House is planning to move forward with so-called reciprocal tariffs against countries that have the biggest imbalances in the trade of goods with the U.S. But it will hold off for now on broader “sectoral” tariffs targeting all imports in industries like automobiles, semiconductors, and pharmaceuticals that had been expected to come that day.
A White House official told Barron’s that the April 2 tariffs may or may not include sectoral tariffs and that no final decisions have been made.
The tariffs are expected to fall the hardest on the 15% of countries that have the biggest trade surpluses with the U.S., which Treasury Secretary Scott Bessent has called the “dirty 15.”
The White House hasn’t specified who those trading partners are, but a request for public comment from the U.S. Trade Representative last month called out Argentina, Australia, Brazil, Canada, China, the European Union, India, Indonesia, Japan, South Korea, Malaysia, Mexico, Russia, Saudi Arabia, South Africa, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom, and Vietnam.
That list accounts for 88% of goods traded with the U.S., the USTR said. But even so, if the administration sticks to the reciprocal tariffs rather than adding the sectoral ones as well, that would be a relief for investors. On Monday morning, the S&P 500
+1.76% rose 1.6% while the Nasdaq CompositeCOMP+2.27% gained nearly 2%.
The sectoral tariffs on automobiles, semiconductors, and pharmaceuticals would have amounted to about $100 billion over the next year, twice the size of the reciprocal tariffs, according to Strategas Securities. Even without those sectoral tariffs, the U.S. over the next 12 months could levy more than $142 billion in tariffs, including $47 billion in reciprocal tariffs as well as more than $87 billion in tariffs on China, Mexico and Canada that the White House has said are in response to the border crisis and illegal fentanyl imports.
Reciprocal tariffs might also be less long-lasting than the sectoral ones because they are seen as tools to provide negotiating leverage to get other countries to remove their own trade barriers. In contrast, Trump has said many of his other tariff plans are to encourage the rebuilding of manufacturing in the U.S., something that could take years to achieve if it happens at all.
Still, even if the White House holds off on sectoral tariffs on April 2, they could come later. China and Canada have already retaliated with tariffs of their own against the U.S. Other countries could ramp up their own levies during negotiations.
Trump has also shown a propensity to use tariffs to achieve other policy goals. On Monday, he wrote on Truth Social that on April 2, he would impose 25% tariffs on any country that buys oil or gas from Venezuela—a move the president said was in response to Venezuela sending “tens of thousands of high level, and other, criminals” to the U.S.
Companies with the most to lose from the unfolding trade war include foreign automobile makers like BMW and Volkswagen, retailers like Best Buy
+2.87% and the furniture chain WayfairW+12.48%, and some industrial companies including Honeywell InternationalHON+0.82% and 3M, analysts for Morgan Stanley wrote in a research note last week.
“Although the precise path toward implementation is unclear, on both tariff levels, products, & geographies, one thing we can say with clarity: Tariffs are going higher,” the Morgan Stanley analysts said.
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Write to Joe Light at joe.light@barrons.com
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