HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Equities react negatively to Trump's new car tariff surprise


27 March 2025

Raffi Boyadjian   Written by Raffi Boyadjian

Car tariffs in the spotlight

Despite expectations of April 2 being the main tariff day, US President Trump surprised the markets with yesterday’s announcement about car imports duties. Starting on April 2, a new 25% tariff will be imposed on all cars and light trucks imports that are not manufactured in the US. Auto parts imports will be given a one-month tariff exemption, potentially until May 3. Additionally, Trump is trying to get approval to make interest payments for US-made cars tax-deductible, to further support American car manufacturers.

Car companies based in Mexico, Japan, South Korea, Canada and Germany will be hit the hardest. Interestingly, this is probably the first time that Japan's economic interests are being targeted by President Trump. It is pretty obvious that while Trump continues to talk about April 2 being “Liberation Day”, he has made a significant move, with wider repercussions than the steel/aluminum tariffs.

Having said that, it should be noted that Trump, as evident in his short duration as the 47th President, could quickly change his mind on the tariffs’ starting date and/or approve exemptions. Affected countries have one week until the new car tariffs officially commence to offer ‘gifts’ to Trump, mostly in the form of new investments, and earn the much-longed-for exemption.

Should this bargaining fail, most affected countries would most likely retaliate. European Union officials are expected to up their rhetoric, threaten to impose harsh trade restrictions and seek agreements with other countries such as Canada. Trump has already commented on this likely development, threatening even higher tariffs on countries that will collude against the US.

Risk appetite plummets

Yesterday's announcements pushed equities into the red, with the Nasdaq 100 index leading the selloff and recording its sixth +1.5% daily correction. It is now on course for the worst monthly performance since September 2023, when the market feared a protracted pause from the Fed. Additionally, despite the ongoing recovery, the Nasdaq 100 is still 10% below its mid-February peak.

Similarly, the S&P 500 index was under pressure yesterday, with the Technology and Communication sectors feeling the brunt. European stocks are expected to suffer the most, though, especially as the April 2 announcements will most likely focus on European-based corporates, such as pharmaceuticals.

Likewise, upon the tariff announcements, the US dollar got another boost, dropping to 1.0735 against the euro, and climbing to 150.74 versus the yen. With month-end rebalancing flows likely benefiting the dollar, the door appears to be wide open for dollar bulls to continue recovering some of their sizeable losses against major currencies.

Central banks are in a dilemma

Amidst these developments, central banks are still trying to meet their targets. Most remain torn between the potentially significant impact on growth, which in the case of the eurozone could be quite sizeable, and the increased possibility of another COVID-like acceleration in inflationary pressures.

The market is currently pricing 62bps and 55bps of easing for the Fed and the ECB, respectively. Actually, the chance of an April ECB cut has been bumped up to 80%. However, with Trump’s appetite growing with each bite, there is a steadily growing risk of stagflation. In this case, most central banks will likely be forced to choose price stability over growth; the ECB will probably be in this camp, while the Fed could be under severe pressure from the US President to ignore the inflation threat and soften its interest rate stance.

Gold and oil keep their recent gains

Gold is trading north of $3,035, supported by yesterday’s announcement, but failing to reach its recent all-time high. Similarly, despite the latest news, oil is mostly maintaining its recent gains and hovering above the $69 area. Having said that, even if one accounts for the possibility of a marked deterioration in US-Iran relations, the current upward move remains somewhat of a mystery, especially as there is an increasing chance of a global economic slowdown.

By XM.com

#source


RELATED

Dollar steadies as risk appetite eases on data and key deadlines

Dollar tumbles 14% against the euro in the first half of the year; Spotlight stays on US budget bill and trade talks; US data deluge today, an appetizer for Thursday’s jobs report; Oil hovers around $66, gold rally gains momentum.

1 Jul 2025

Trade optimism boosts Fed rate cut bets

Dollar slides as the US gets closer to trade deals. Trump's obsession with lower interest rates also weighs. S&P 500 and Nasdaq hit new record highs. Gold in corrective mode due to safe-haven outflows.

30 Jun 2025

Dollar stabilizes amidst mixed risk sentiment

Israel-Iran truce holds; investors focus on the US economy; Powell shuts down July rate cut expectations; US equity rally pauses as dollar tries to recover; Oil hovers around $65, gold bounces higher.

25 Jun 2025

Dollar suffers as risk appetite takes hold

An Israel-Iran ceasefire has been agreed after 12 days of hostilities; Risk appetite gets a boost, but dollar weakness resumes; Oil surrenders its recent gains; gold slips as well; Focus today on Powell’s testimony as Fed doves push for a rate cut.

24 Jun 2025

Dollar set for weekly gains amid Israel-Iran war

Oil rebounds as supply concerns remain elevated - SNB cuts by 25bps, BoE delivers dovish hold - Wall Street resumes trading after Juneteenth.

20 Jun 2025

Dollar off highs despite rising Middle East geopolitical tensions

Israel-Iran conflict continues; US considers joining in; Dollar slips as risk appetite slightly improves; Oil maintains its recent gains, but gold fails to benefit; Pound pressure lingers as BoE meets on Thursday.

18 Jun 2025

Israel-Iran conflict remains in focus ahead of Fed decision

The US dollar slipped against all but one of its major counterparts on Monday, with the Japanese yen posting the largest loss.

17 Jun 2025

Dollar softens amidst cautious risk-on reaction

Israel-Iran confrontation intensifies; Risk appetite improves after an abysmal session on Friday; Dollar is on the back foot again; both gold and oil surrender gains; Four central bank meetings this week, starting with BoJ on Tuesday.

16 Jun 2025

Dollar slides amidst tariff rhetoric and soft US data

Trump dampens risk appetite, cites unilateral tariff plan; Dollar and equities suffer as investors also question US-China progress; British pound under pressure after another set of soft UK data.

12 Jun 2025

Dollar fails to recover as investors zoom in on trade talks

US-China talks resume; chances of an agreement increase; Mixed US stocks performance, but S&P 500 just shy of all-time high; Another set of soft UK data weighs on the British Pound; Gold trades sideways, as silver tries to keep its bullish momentum alive.

10 Jun 2025

Dollar seeks to rebound as investors zero in on US data

Trump-Musk public spat overshadows developments elsewhere. Trump-Xi call restarts US-China negotiations but outlook clouded. Key US data at 12:30 GMT; all eyes on nonfarm payrolls. Gold trades sideways, as silver jumps to a new high.

6 Jun 2025

Risk appetite takes a hit as Trump’s tariffs return to the spotlight

Dollar under pressure as Trump hardens trade stance; US administration demands trade offers from key partners; Weak start to data releases; focus today on Fedspeak; Both gold and oil surrender a small part of Monday’s gains.

3 Jun 2025

Dollar slides amid simmering trade frictions

Trump accuses China of violating deal. Threatens to increase tariff on steel and aluminum. Dollar slides, stock futures point to a lower Wall Street open. Gold attracts safe-haven flows, oil gains on OPEC’s decision.

2 Jun 2025

Dollar benefits from court’s tariff decision but outlook remains clouded

A US federal court blocks Trump’s tariff decisions; Dollar and US stocks jump on court decision, but rally already fading; Risk of Trump dropping his recent congenial stance; Gold attempts to climb higher; oil trades above $63 again.

29 May 2025

Dollar benefits amidst a muted risk-on reaction

Market participants are back in action following the US and UK bank holidays, which resulted in extremely low trading volumes during Monday’s session.

27 May 2025

Dollar weakness accelerates as risk appetite fades

Both the dollar and US stocks lose ground; Trump’s tax cut bill in the spotlight; Pound fails to react to stronger CPI report; Gold, oil and bitcoin rally on Israel-Iran headlines.

21 May 2025

Dollar struggles to maintain its recent gains

Both the dollar and US stocks seek direction as euphoria fades; Implied volatilities ease across the board. Trump calls for a Fed rate cut but bond markets disagree. Gold range trades, as oil stumbles at $64.

14 May 2025

Dollar gains after Fed decision

The US dollar outperformed all its major peers on Wednesday after the Fed decided to keep interest rates unchanged and sounded less dovish than expected.

8 May 2025

US and China agree to hold talks, Fed decision on tap

Dollar rebounds as US and China agree to hold trade talks. Fed enters the spotlight; focus to fall on tariff commentary. Euro gains after Merz elected as German Chancellor.

7 May 2025

US dollar fails to benefit from improved risk appetite

Stock performance this week will depend, among other factors, on the usual tariff rhetoric from US President Trump and the Fed meeting.

5 May 2025


Editors' Picks

How to Choose the Best Forex Advisor 2025

Key Factors to Consider When Choosing a Forex Advisor. Risk Management. Fees and Costs. Compatibility with Your Trading Style.

Automating Success: The Benefits and Risks of Using Forex Expert Advisors

This article explores the benefits and risks associated with using Forex Expert Advisors, providing insights into how traders can maximize their potential while mitigating potential downsides.

Best Forex Brokers 2025

By prioritizing factors such as overall rating, regulatory compliance, trading conditions and platform reliability traders can make an informed decision that aligns with their trading needs and aspirations, setting the stage for a potentially prosperous trading journey.

The Top Forex Expert Advisors 2024: Performance, Strategy, and Reliability Review

An annual roundup reviewing the most successful Forex Expert Advisors (EAs) based on their performance, strategies employed, reliability, and user feedback. This piece would provide insights into which EAs have been market leaders and why.

The Evolution of Forex Expert Advisors: Navigating the Path of Technological Revolution

The concept of automated trading has been around for decades, but the accessibility and sophistication of Forex EAs have seen significant advancements in the past few years. Initially, automated trading systems were rudimentary, focusing on simple indicators like moving averages.

Best Forex EAs – Forex Expert Advisors Rating

Expert Advisors (EAs) Rating features high-quality Free and paid Forex EA most popular on the market today.

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.