Markets weekly outlook – Liberation day tariffs and potential impact
The upcoming week will focus on U.S. President Donald Trump’s plans for new tariffs. Alongside this, markets will also watch U.S. jobs data, an Australian central bank meeting, and a key eurozone inflation report.
Asia Pacific Markets
The main focus this week in the Asia Pacific region will be tariff developments even though we have a slew of data releases.
Next week, in China the focus will be on new tariffs. President Trump’s “Liberation Day” announcement and the U.S. investigation into China’s imports under the Phase One Trade Agreement are key events. The investigation deadline is April 1, with results expected then or shortly after. While China isn’t the main target of new tariffs, the investigation could lead to further actions.
Trump’s TikTok ban moratorium ends on April 5, making next week important for this issue. He has hinted at reducing China tariffs to secure a TikTok deal, something which the Chinese so far do not seem likely to entertain..
On the data side, China’s official PMI (Monday) is expected to rise slightly to 50.4 from 50.2, while the Caixin PMI (Wednesday) may dip to 50.6 from 50.8. If correct, this could indicate tougher times for Chinese exporters.
In Japan, industrial production is expected to bounce back, likely due to increased auto production as manufacturers ramped up before new tariffs. However, the Tankan survey for large manufacturers is expected to drop due to tariff concerns, while the non-manufacturing survey may improve thanks to strong wage growth.
High food prices, especially for rice, are weighing on consumer spending. Retail sales and household spending for February are expected to show a decline.
The Reserve Bank of Australia is expected to keep interest rates unchanged on April 1. Even though February’s inflation was weaker than expected, overall inflation for the first quarter likely rose slightly. High inflation and tariff risks are expected to stop the RBA from making consecutive rate cuts and thus a hold seems the likely outcome.
Europe + UK + US
In developed markets, the US, Europe and UK tariffs will dominate the headlines. As we have seen in recent weeks, tariffs have even overshadowed data releases and this is something which could continue next week.
The upcoming week will be busy. The 25% tariffs on foreign steel and aluminum now include autos, and on April 2nd, “Liberation Day,” more tariffs will be announced on countries accused of “cheating” America. This could mean combined tariffs, like 50% on European autos (25% EU + 25% auto tariff).
These tariffs may raise prices for US consumers, reduce spending power, and hurt corporate profits, fueling fears of stagflation, which could harm jobs and asset prices. Fed Chair Powell speaks Friday, but he’s likely to stay neutral, focusing on future economic data to guide decisions.
I expect ISM business surveys to show negative reactions due to tariff concerns and market drops. The jobs report will be key, as we will get insights and gauge if hiring slowed further amid uncertainty and government layoffs.
