Bassanese Bites: Liberation Day – March 31 2025

Global markets last week

There’s not much else driving global markets at present than US President Trump’s drum beat of tariff announcements. Last week started on a positive note, with markets encouraged by suggestions the suite of US reciprocal tariffs to be announced on ‘liberation day’ this Wednesday would be not as extensive as first feared.

Optimism quickly faded, however, with the out-of-the-blue car tariff announcement. When questioned, Trump doubled down, indicating he ‘couldn’t care less’ if foreign car makers raised their prices, defiantly declaring: “I hope they raise their prices, because if they do, people are gonna buy American-made cars.”

Of course, US makers will have to pay more for imported car inputs and also likely face retaliation in their own export markets. The market verdict, so far at least, is to reduce the market value of US auto makers. 

For markets, liberation day is as much about being liberated from further tariff announcements as it is the ongoing uncertainty on tariff policy that most risks undermining markets, business and consumer confidence. That said, we now also face possible retaliation from US trade partners, and then America’s possible retaliation to that retaliation.

Meanwhile, US economic data is starting to fray at the edges, with a downwardly revised reading for the University of Michigan consumer sentiment index on Friday – and a further rise in now-elevated consumer inflation expectations. February’s core private consumption expenditure deflator (PCED) was also a touch higher than expected, with annual inflation lifting from 2.7% in January (revised up from 2.6%) to 2.8%.   

Wednesday’s ‘liberation day’ is the global market highlight this week, with investors hoping that rumours are true and the suite of tariffs will be relatively modest (we can live in hope but anything is possible!).