President Donald Trump unveiled a raft of tariffs after the market closed April 2 that included, among other things, a minimum baseline of 10% tariffs on all countries and 25% tariffs on automobiles imported from other nations.
Adam Hetts, portfolio manager and global head of multiasset at Janus Henderson Investors, said Trump’s tariffs "scream 'negotiation tactic'" and will likely keep markets on edge for the foreseeable future.
“Fortunately, this means there's substantial room for lower tariffs from here, albeit with a 10% baseline in place,” Hetts said. “We've seen the administration have a surprisingly high tolerance for market pain, now the big question is how much tolerance it has for true economic pain as negotiations unfold.”
Janus has $378.7 billion in assets under management.
Saira Malik, CIO and head of equities and fixed income at Nuveen, commented that “though there is now more clarity on the degree of tariffs across countries, continued negotiations, (the) timeline of implementation and fear of future changes could lead to continued market volatility.”
Malik noted that Trump also announced reciprocal tariffs at about half the tariff rate that other countries levy. Indeed, during his festive speech in the Rose Garden of the White House, Trump said: “So, the tariffs will not be a full reciprocal. I could have done that, yes, but it would have been tough for a lot of countries.”
Malik also said that “while markets will remain volatile due to ongoing tariff negotiations and investors will continue to read the tariff ‘tea leaves,’ the focus will increasingly shift to the impact on the economy and the risk of stagflation.”
Nuveen has $1.3 trillion in AUM.
James St. Aubin, CIO of Ocean Park Asset Management, with $3 billion in AUM, said “the specter of an ongoing trade war will continue to cast a pall over both business and consumer confidence."
As this economic uncertainty persists, he added, the "probability of a recession grows commensurately. It seems that the administration is prepared to bear this cost in pursuit of its goals to restore America’s manufacturing base, despite the potential ramifications for the broader economy over the short term."
Jason Hsu, founder, chairman and CIO of Rayliant Global Advisors, said he thinks the market had already priced in something much worse than what Trump unveiled.
“Trump isn't looking to cut off the nose to spite the face,” Hsu said. “He wants to get people to the negotiation table.” As a result, Hsu thinks Trump will be “balanced and very tactical and flexible on his tariff plan.”
Rayliant has $168 million in AUM across four exchange-traded funds.
Malik also warned that second-quarter gross domestic product could be impacted negatively by 1% to 2% due to tariffs, raising fears of a recession. “The current consumer pullback, government layoffs, hesitancy around corporate spending and equity market volatility may result in a self-fulfilling prophecy with regards to a recession,” she added.
Andrzej Skiba, managing director and head of BlueBay U.S. fixed income at RBC Global Asset Management, said he does not think that markets can “rebound aggressively after April 2 as trade-related headlines will keep pouring over the coming weeks, and investors will likely worry about growth implications until hard data dispels some of these fears.”
RBC GAM has $485 billion in AUM.
Jordan Irving, portfolio manager at Glenmede Investment Management, said the "bottom line is that there is a least a bit more certainty tonight regarding tariffs, but the ultimate path will remain circuitous.”
Glenmede Investment Management has $6.6 billion in AUM.
Prior to the official release of Trump’s new tariff regime, a group of 12 state treasurers and one state auditor wrote a letter addressed to the president in which they condemned the new trade policy.
“As state executives responsible for managing long-term public investments and safeguarding the economic well-being of our constituents, we are increasingly concerned that the current use of tariffs and unpredictable shifts in trade policy are imposing real and rising costs on American families, small businesses, and communities across all 50 states,” the group wrote in the April 2 letter. “These actions risk undermining the very foundations of our global competitiveness and fiscal stability. We urge you to reconsider the imposition of new tariffs and to adopt a more deliberate, transparent, and strategic trade policy; one that supports American workers and businesses without sacrificing our economic resilience or global leadership.”
Signatories to the letter, all Democrats, include Deborah B. Goldberg, Massachusetts state treasurer and receiver-general; David L. Young, Colorado state treasurer; Laura M. Montoya, New Mexico state treasurer; James A. Diossa, Rhode Island general treasurer; Erick Russell, Connecticut treasurer; and Fiona Ma, California state treasurer.
Russell is also principal fiduciary of the $59.3 billion Connecticut Retirement Plans & Trust Funds, Hartford, while Diossa is board chair of the $11.5 billion Rhode Island Employees' Retirement System, Providence.
