Navigating Turbulent Waters: The Investment Impact of the Global Tariff War
By Katerina Huang, ekaterina.huang@szc-group.com
10th April 2025
“Liberation Day” Tariffs
In a shockwave that has shaken world markets, the United States, under President Donald Trump’s leadership, has imposed a succession of sweeping tariffs lists aimed at correcting perceived alternate imbalances. Dubbed “Liberation Day” tariffs, the measures include an across-the-board 10% tariff on all imported goods, along with some appreciably higher rate of increase carried out to some specific nations (Harithas et al., 2025). Noticeably, it comes to effects from April 9th that U.S. reciprocal tariff rate for China has increased to 125% and there are additional reciprocal tariffs on other nations as well – European Union, Vietnam, India, etc., totalling 185 countries (Schafer & Canal, 2025).
(Figure 1. Source: Yahoo Finance via white house “tariffs charged to the U.S.A including currency manipulation and trade barriers”)
Global Reactions and Countermeasures
Globally, some countries have reacted and responded to the “Liberation Day” tariffs with a combination of condemnation and retaliatory measures. China’s State Council Tariff Commission classified the tariffs as a classical unilateral bullying and reacted with more sweeping retaliation measures, involving higher rates of counter-tariffs(Liu & Gan, 2025). Additionally, the European Union adopted a retaliation for Donald Trump’s steel and aluminium tariffs on April 9th but still expressed a willingness to negotiations (The Economist, 2025). Other countries, including Canada, has announced several measures toward this as well, for example, government of Canada published a list of vehicle products with 25% higher tariffs from the U.S., effective April 9th (Government of Canada, 2025). The countermeasures are basically towards the non-CUSMA-compliant vehicle made inside the U.S. And the non-Canadian and non-Mexican content material of CUSMA-compliant US-made motors.
Economic Implications
Tariffs can bring the market downturn through several potential mechanisms. Firstly, they inflate the charge of imported goods and substances and further constrict earning margins for companies which are reliant on importing. It could be transforming immediately to multiplied client charges and decreased demand further. Secondly, retaliatory tariffs and countermeasures toward the U.S. will constrict the U.S. exportations. This will depreciate the revenue streams for U.S.-based companies operating globally with exporting needs. And thirdly, uncertainty concerning alternative controls can cripple investor sentiment, and this could potentially result in selloffs and increased market volatility. Thus, generally speaking, all those factors contribute to a hard and unstable environment for equities and trading.
The imposition of the tariffs might have introduced remarkable volatility within the market. It has made Wall Street experienced immediate sharp declines, as the S&P 500 declined more than 1.5%, the Nasdaq fell 2.1%, and Russell 2000 decreased 2.7%, right following the announcement of tariffs (Chao-Fong et al., 2025). As of April 10th, the tariff imposition by the U.S. government has still greatly contributed to the volatility in the stock market which could be a potential reflection of investor apprehension regarding escalating alternative tensions. Until the news on April 10th, the tech-intensive Nasdaq Composite still falls 6% and S&P has declined 5% at the bottom even though it is seen a boost in the stock market on April 9th (LoGiurato et al., 2025). The reaction of the market shows a fear attitude toward the tariffs action, especially when such movements will ultimately lead to boosted consumer prices and heightened tensions among worldwide trades. Those impact will further limit the economic growth because all parties of trading will hold conservative attitudes when more people is considering a larger probability of a potential recession (Treisman, 2025).
(Figure 2. Source: Yahoo Finance)
China’s Potential Reaction and Its Impact on North American Investments
As the center of this tariff war, China’s response to the U.S. tariff measures has been multifaceted, along with its own tariff lists on U.S. items and thus enforcing measures to protect its economy under this tariff war. Notably, China has confirmed the measures and restricted its companies from investing inside the United States, and this measure is aiming to obtain potential leverage in alternate negotiation between Chinese government and the U.S. government. This also reinforce companies and investors to reconsider their strategies consequently (Bloomberg, 2025).
Investment Decisions in North America: Sectoral Impacts
The trade tensions between countries are surely influencing investment strategies and decision-making processes across various sectors in North America.
For the automotive industry, the increased prices in the manufacturing process by tariffs on imports of cars and parts worsen, and the supply-chain-integrated cost containment increases the total production costs and compresses the profit margins. Investors may be cautious in this regard as the returns are needed to be recalculated.
For the technology sector, higher costs of electronics and electronic accessories are expected, thus time-to-time adjustments in price patterns would likely defer growth strategies for technology companies and force companies to rethink and double check their investment decisions in global supply chains.
For the manufacturing industry, the increase in tariff directly and strongly impacts the prices of raw materials and potentially causes an increased price for imported machinery. The boosting price is disrupting the integrated supply chains and forces companies to re-consider the manufacturers distributions.
There is also obvious impact by tariffs to diversified other industries, but similarly, corporations are facing challenges on materials, goods, equipment and operations costs – this indicates for companies, they need to start thinking appropriate actions for advisory services of contract financing, equipment financing, factoring etc., in order to help companies hedge the risks of uncertainty.
Conclusion
The “Liberation Day” tariffs have demonstrated a significant shift in the U.S. trade attitude and policies tendency, with further implications for the global economic system and investment landscape. Even though initially the intended goal of this measure is to reinforce domestic companies and relocate supply chain of several industries back to the U.S., the current results in alternate tensions, market instability and operation inconsistency among sectors are sparking fear and concerns among investors and market participants.
As an investment bank, SZC Group helps businesses strategically navigate market volatility with expert advisory services, tailored solutions in debt and equity financing, as well as mergers and acquisitions. We also offer opportunities for accredited investors, wealth managers, and family offices seeking stability amidst global trade tensions.
If you are needing assistance in financing and investments, please contact one of our Managing Partners Shanaz Joan Parsan – please email sjparsan@szc-group.com or call 647 313 1505.
References:
Chao-Fong, L., Ambrose, T., Wearden, G., & Fulton, A. (2025a, April 8). Wall street dives as hopes wane for tariff delays – as it happened. The Guardian. https://www.theguardian.com/business/live/2025/apr/08/stock-markets-nikkei-dow-ftse-100-asian-market-today-trump-china-tariffs-threat-business-news-live-latest-updates
The Economist. (2025). The EU’s response to Donald Trump’s tariffs seems to work. https://www.economist.com/europe/2025/04/09/the-eus-response-to-donald-trumps-tariffs-seems-to-work
Government of Canada, D. of F. (2025, April 8). List of vehicle products from the United States subject to 25 per cent tariffs effective April 9, 2025. Canada.ca. https://www.canada.ca/en/department-finance/news/2025/04/list-of-vehicle-products-from-the-united-states-subject-to-25-per-cent-tariffs-effective-april-9-2025.html
Harithas, B., Meng, K., Brown, E., & Mouradian, C. (n.d.). “liberation day” tariffs explained. CSIS. https://www.csis.org/analysis/liberation-day-tariffs-explained
Liu, J., & Gan, N. (2025, April 4). China imposes 34% reciprocal tariffs on imports of us goods in retaliation for Trump’s Trade War | CNN business. CNN. https://www.cnn.com/2025/04/04/business/china-us-tariffs-retaliation-hnk-intl/index.html
LoGiurato, B., Friar, K., & Ferré, I. (2025). Stock market Today: Nasdaq falls 6%, Dow loses 1,700 points, S&P 500 drops 5% as markets crumble with Trump’s tariff war turning to China. Yahoo! Finance. https://finance.yahoo.com/news/live/stock-market-today-nasdaq-falls-6-dow-loses-1700-points-sp-500-drops-5-as-markets-crumble-with-trumps-tariff-war-turning-to-china-133050074.html
Schafer, J., & Canal, A. (n.d.). 8 charts show the dramatic fallout from Trump’s “Liberation Day” announcement. Yahoo! Finance. https://finance.yahoo.com/news/8-charts-show-the-dramatic-fallout-from-trumps-liberation-day-announcement-080053892.html
Treisman, R. (2025, April 7). Tariffs are fueling fears of a recession. what does it take to actually declare one?. opb. https://www.opb.org/article/2025/04/07/recessions-what-are-they-and-when-do-they-happen/
Bloomberg News. (2025). China restricts companies from investing in us as tensions rise | Financial Post. https://financialpost.com/pmn/business-pmn/china-restricts-companies-from-investing-in-us-as-tensions-rise
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