4 Charts to Watch as Trump's Tariffs Unfold

As President Donald Trump's "Liberation Day" tariffs take effect, the global financial landscape is poised for significant shifts. The tariffs, announced on April 2nd, 2025, are unprecedented in their scope and potential economic impact, with rates as high as 49% on certain goods from countries like Cambodia. These tariffs are set to reshape trade dynamics and market volatility, making it crucial for investors to stay informed and adapt their strategies accordingly.



1. The S&P 500's Volatility

The S&P 500 has been on a rollercoaster ride, with the index confirming a correction in mid-March and currently down about 8% from its February record high. The tariffs are expected to exacerbate this volatility, as investors grapple with the potential impact on corporate earnings, global growth, and inflation. The Cboe Volatility Index (.VIX) has already surged to a more than two-week high of 24.80, indicating heightened investor anxiety.

2. Sector-Specific Impact

Key sectors such as automotive, metals, industrial manufacturers, and technology are likely to be hit hard by the tariffs. The automotive sector, for instance, faces a 25% tariff on auto imports, which took effect immediately on April 3rd. This sector is expected to experience significant short-term disruptions, including increased costs for imported vehicles and components, which could lead to higher consumer prices and reduced demand.

In the technology sector, companies like Apple, Microsoft, and Nvidia are particularly vulnerable due to their reliance on global supply chains. The increased tariffs will likely lead to higher costs for imported goods, affecting their profitability and competitiveness. In the short term, these companies may experience reduced earnings and increased costs, but in the long term, they may explore alternative supply chain strategies to mitigate the impact.

3. Safe-Haven Assets

As market volatility increases, investors are likely to flock to safe-haven assets such as gold and U.S. Treasuries. Gold prices have already hit new highs, with the most active gold futures contract finishing lower for the first time in four sessions. The flight-to-safety trade into government debt has sent the 10-year Treasury yield to below its 200-day moving average, indicating a strong demand for safe assets.

4. Defensive Sectors

Defensive sectors, such as consumer staples, healthcare, and utilities, are expected to remain stable during broader stock market turbulence. These sectors are viewed as defensive investing strategies that may help hedge portfolio risk. For example, the S&P 500's consumer-staples, healthcare, and utilities sectors were among the top performers among the large-cap index's 11 sectors in the first quarter of 2025, with returns outpacing the 4.6% decline for the S&P 500 in the same period.

Conclusion

As Trump's tariffs take effect, investors need to stay vigilant and adapt their strategies to navigate the heightened market volatility. By focusing on defensive sectors, diversifying with safe-haven assets, and using volatility as an opportunity for long-term strategic investing, investors can ride out the storm and potentially find opportunities amidst the turbulence. The charts and data presented here provide a snapshot of the current market dynamics and highlight the key areas to watch as the tariffs unfold.