The president’s ‘liberation day’ might come with some changes.
U.S. stocks rallied to kick off the trading week after investors cheered on reports suggesting President Donald Trump may narrow the planned April 2 reciprocal tariffs. The White House neither confirmed nor denied that changes are coming.
The blue-chip Dow Jones Industrial Average surged by 500 points, or about 1.3 percent. The tech-heavy Nasdaq Composite Index jumped more than 350 points, or roughly 2 percent. The broader S&P 500 picked up close to 100 points, or 1.6 percent.
Treasury yields also shot up across the board, with the benchmark 10-year topping 4.32 percent.
“Equity futures are shooting higher this morning after it appears some positive news on tariffs (putting them off) has influenced buyers,” Bob Lang, founder and chief options analyst at Explosive Options, said in a note emailed to The Epoch Times. “This is the last full week of trading in March and the bulls are way behind, 4–6 percent in all the indices, so that is some ground to make up.”
A White House official told The Epoch Times that the administration may or may not have sectoral tariffs on April 2.
“No final decisions have been made yet on sectoral tariffs being tacked onto reciprocal for the April 2 timeline,” the official said.
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The comments were made after two media reports indicated that Trump is looking at making adjustments to his reciprocal tariff plans.
According to The Wall Street Journal, citing an administration official, Trump is expected to narrow his tariff plans next month and exclude industry-specific sectors. The report noted that the new plan could instead impose tariffs on about 15 percent of countries with persistent trade deficits with the United States.
Investors also digested a weekend Bloomberg News report highlighting that the administration will exclude some nations from the levies.
A White House official told The Epoch Times that the White House may or may not have sectoral tariffs on April 2.
“No final decisions have been made yet on sectoral tariffs being tacked onto reciprocal for April 2 timeline,” the official said.
Trump told reporters in the Oval Office on March 21 that there could be “flexibility” on his reciprocal tariffs.
“People are coming to me and talking about tariffs, and a lot of people are asking me if they could have exceptions. And once you do that for one, you have to do that for all,” Trump said.
The president added that he did not change his position when he granted U.S. automakers a one-month reprieve on tariffs earlier this month.
“I don’t change. But the word flexibility is an important word,” Trump stated. “Sometimes it’s flexibility. So there’ll be flexibility, but basically, it’s reciprocal.”
Trump announced that any country that purchases crude oil from Venezuela would face an additional 25 percent on any trade it conducts with the United States.
“President Donald J. Trump announced today that the United States of America will be putting what is known as a Secondary Tariff on the Country of Venezuela, for numerous reasons, including the fact that Venezuela has purposefully and deceitfully sent to the United States, undercover, tens of thousands of high level, and other, criminals, many of whom are murderers and people of a very violent nature,” he wrote on social media platform Truth Social on March 24.
U.S. crude oil was up by more than 1 percent to above $69 per barrel.
Tariff Talk on Wall Street
Since winning the November presidential election, Trump has threatened a flurry of tariffs on U.S. trading partners.
After returning to the White House, he implemented 25 percent tariffs on all steel and aluminum imports and 20 percent levies on Chinese goods entering the United States. He also imposed 25 percent universal tariffs on Canada and Mexico on March 4, though he confirmed two days later that he would suspend levies on products compliant with the U.S.–Mexico–Canada Agreement (USMCA).
The president has repeatedly hyped the April 2 reciprocal tariffs as “liberation day” on social media.
Over the past several weeks, the president’s trade policy adjustments have contributed to the volatility observed on Wall Street. Investors fear that tariffs will fuel inflation and weigh on economic growth prospects, a sentiment that has sent the Nasdaq and S&P 500 into correction territory.
“April 2nd is coming up fast, which is the big tariff day. Expect volatility to pick up,” Lang said.
In a March 19 interview with Fox Business Network host Larry Kudlow, one of Trump’s top economic advisers said the financial markets are overestimating the president’s tariffs.
A trader works on the floor of the New York Stock Exchange on Feb. 3, 2025. Angela Weiss/AFP via Getty Images
“One of the things we see from markets is they’re expecting they’re going to be these really large tariffs on every single country,” he said. “Markets need to change their expectations because it’s not everybody that cheats us on trade; it’s just a few countries, and those countries are going to be seeing some tariffs.”
Treasury Secretary Scott Bessent told Fox Business Network’s “Mornings with Maria” that the aim is to enact reciprocal tariffs on April 2, adding that U.S. trading partners will be slapped with tariffs reflecting their rates, currency practices, and other non-tariff trade barriers.
“On April 2, each country will receive a number that we believe represents their tariffs,” Bessent said. “For some countries, it could be quite low, for some countries, it could be quite high.”
Inflation and Growth
Tariffs operate with a lag effect, so they may not appear in the data anytime soon. Early estimates indicate that inflation is heading in a positive direction.
The Federal Reserve Bank of Cleveland’s Inflation Nowcasting model suggests that the headline annual inflation rate will slow to 2.5 percent next month from 2.8 percent. The Cleveland Fed signaled further slowing in core inflation, which omits volatile energy and food prices, from 3.1 percent to 3 percent.
The Fed’s preferred personal consumption expenditure (PCE) price index for February will be released this week. PCE inflation could slip to 2.4 percent, while core PCE inflation could hold steady at 2.6 percent.
Last week, the U.S. central bank left interest rates unchanged for the second straight meeting. Federal Reserve Chair Jerome Powell reiterated to reporters at the post-meeting news conference that officials are waiting for more progress on inflation and greater clarity on the “net effect” from the new administration’s changes to fiscal, immigration, regulatory, and trade policy.
He shrugged off recession fears and suggested that any tariff-fueled inflation would be “transitory.”
“It can be the case that it’s appropriate sometimes to look through inflation, if it’s going to go away quickly, without action by us, if it’s transitory,” Powell said. “That can be the case in the case of tariff inflation. I think that would depend on the tariff inflation moving through fairly quickly and, critically, as well on inflation expectations being well anchored.”
Updates to the Fed’s Summary of Economic Projections revealed monetary policymakers downgrading their GDP growth forecast for the year ahead from 2.1 percent in December to 1.7 in the March report. They also raised their inflation outlook, with core PCE inflation adjusted higher from 2.5 percent to 2.8 percent.
Hearing Powell utter the COVID-19 pandemic-era term “transitory” was “shocking and downright ingenious,” Jay Woods, chief global strategist at Freedom Capital Markets, said.
“Given the ‘tariffs on, tariffs off’ narrative that continues by the day, this was a master class in how to point a finger at the person who may dictate the severity of inflation and take the onus off the Fed,” Woods said in an emailed note to The Epoch Times. “Now, as we wait for T-Day, Powell can sit back and see exactly what impact these tariffs have.”
Following the Fed’s March policy meeting, Trump urged Powell and his colleagues to lower interest rates and help the U.S. economy ease the tariff-driven transition ahead of so-called liberation day.
