America’s trade policy will be transformed on April 2, 2025, when President Donald Trump imposes sweeping tariffs on various countries. The measures are referred to as “liberation day” for America and aim at countries the US government thinks the US has been economically exploited.
Trump remarked, “April 2 is going to be liberation day for America. We’ve been ripped off by every country in the world, friend and foe.”
The tariffs are expected to eliminate obstacles to trade arising from "unfair" competition against US firms. The decision is bound to transform global markets with trade relations affected with countries in the European Union, China, Canada, and Mexico.
Global markets are in a wait-and-watch mode ahead of April 2, forecasting the rise and fall of stocks in vehicles, metals, and pharmaceuticals with shifts to the economy, currency value, supply chains, and the aftermath of turbulence predicted.
Key Sectors Hit by Tariffs
Vehicle manufacturing
The new tariffs the Trump administration imposes will significantly impact European auto companies such as Volkswagen (ETR:VOWG_p), BMW (ETR:BMWG), Mercedes-Benz (OTC:MBGAF), and others.
The surging tariffs on vehicles and accessories produced outside the United States are predicted to heighten the prices of foreign-branded cars and components, subsequently decreasing the demand for these vehicles in America. Such companies that build vehicles in Europe and other regions may experience a decline in demand which would hurt their value.
Exacerbating this situation is the likelihood of the European Union retaliating with counter-fax tariffs. If such countermeasures are taken, automakers will face additional hardships in other markets, which would aggravate the situation for automobile manufacturers.
Effect on stock: Lower sales coupled with increased costs of production because of the tariffs would adversely affect the shares of the European car manufacturing giants like BMW and Volkswagen.
The downside potential for Volkswagen’s stock price
Metals: Impact on producers and industry
Like any economic intervention, the introduction of tariffs on aluminium and steel futures imports as well as on some other goods for foreign countries will change the picture of world trade metals. In the same manner, increased tariffs for goods produced out of these two base metals are bound to raise the price of rolled steel products in the US and, by extension, impact the construction industry and other sectors that utilize ferrous metal products.
This could be a good thing for US producers of steel like Nucor (NYSE:NUE), US Steel, and Alcoa (NYSE:AA) as they stand to make supernormal profits at the expense of foreign competitors whose goods will be subjected to heavy tariffs in America.
However, industry behemoths such as Boeing (NYSE:BA) and Caterpillar (NYSE:CAT) will bear the brunt of paying heftily for aluminum and steel. Their cost of production is bound to go up as the prices of the metals rise which in turn will affect the profits that they make as well as their stock prices.
Boeing and Caterpillar are classified as large industrial operators and it is expected that they will experience loss in share price owing to higher production costs, while the market value of US producers like Nucor Alcoa and US Steel will skyrocket due to increase in the prices and demand for steel and aluminum.
Potential for U.S. Steel stock price
Pharmaceuticals: Impact on manufacturers and drug prices
Implementing new taxes on pharmaceutical products could result in higher drug prices for consumers in America. Curbing imports of pharmaceutical products due to the tariffs could result in some drugs not being available in the market, especially those that are produced outside the US. This would increase the difficulty for consumers in America to access certain drugs while also increasing their cost.
At the same time, US companies like Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), and Moderna (NASDAQ:MRNA) could benefit from the increased tariffs in foreign companies as it allows them to strengthen their foothold in the domestic market.
Losing profits for US pharmaceuticals due the European Union and Canada imposing retaliatory measures could impact their ability to export drugs to these countries After all, these measure could lead to more expensive drugs, which would not please consumers.
Certain retaliatory measures towards US imports could lead to a dip in price for European and Asian companies’ shares. On the other hand, American companies are likely to see an increase in peg with their shares as demand for their products would increase while the companies would also strengthen their dominance in the US market.
Potential for Pfizer stock price
Reaction of the leading economic players
EU: Given the new tariffs, the EU may impose customs duties on American products, which will hurt the European automotive industry, particularly in Germany, France, and Italy, which are dependent on exports to the US. Car and other goods sales losses may reach billions of euros. In this sense, the euro is expected to decline because uncertainty in trade is likely to slow economic growth in the bloc and fuel risks to the currency.
China: China, as one of the U.S.’s largest trading partners, might impose tariffs on U.S. products in retaliation for the increased tariffs. This would lead to lower demand for primary products, affecting export markets like Australia and Brazil. One possibility is that China would lower the USD/CNY’s value in response to the tariffs, which would allow Chinese goods to be sold cheaper in the international market and lessen the economic burden.
Canada and Mexico: Canada and Mexico might now have greater difficulties complying with the USMCA (previously known as NAFTA) as higher tariffs imposed by the US on these countries would deteriorate trade relations with America. Industries such as automotive which have liberal supply chain management and are used to fast and easy cross border trading will be most affected. The effect on their economies would be large, and Canada and Mexico’s response could be to also impose tariffs on the US.
Other countries: Increasing tariffs and trade restrictions will put downward pressure for the currency of developing nations. Thus, many of these developing countries, who are already weakened, will lose the ability to competitively trade due to rising tariffs. In addition, uncertainty in trade flows will raise the cost of logistics, which in turn, will affect the global supply chain and increase the risk of inflation.
Conclusion
It is undeniably certain that the recently adopted tariffs during John Trump’s presidency will greatly affect the trade and economies of various nations. It would not be surprising if prices for automobiles, metallic products, and even certain medicines increased in the United States, leading to a diminishing purchasing power and a negative effect on trade.
The restriction in exports will no doubt put pressure on European automobile companies, metal manufacturers, and even pharmaceutical organizations, which will lead to lowered profitability and a possible dip in stock prices. On the other hand, American companies in that particular sector might also benefit which would be shown in the stock prices.
China, the EU, Canada, and Mexico adopting the retaliation strategies will take a toll on United States currency and increase the economic and trade war uncertainty, which in return will have negative implications on the global economy.
There is an ever-changing forecast for trade relations since the struggle between escalating the conflict and peace talks is perpetual. But there is one thing that people are certain of and that is that international economies and trade markets will need to undergo drastic alteration due to the impending instability caused by Trump’s era of trade barriers.