The Return of Tariffs: Why Trade Policy is Roiling Markets Again

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After years of relative stability in global trade, early April brought a dramatic shift. The Trump administration rolled out the most aggressive trade policy change in decades, rattling markets and prompting urgent recalibrations from businesses across the globe. With broad-based tariffs now in effect, and more on the way, the ripple effects are being felt everywhere—from Wall Street deal rooms to shipping docks in Asia.

In early April, the Trump administration enacted the most sweeping trade policy shift yet, imposing a minimum 10% tariff on all U.S. trading partners effective April 5. Countries like China, Japan, and the EU face even higher rates starting April 9. According to J.P. Morgan, these new measures could raise the average effective tariff rate from around 10% to over 23%, potentially generating nearly $400 billion in revenue — the largest U.S. tax hike since 1968. The bank estimates these tariffs could drive up Personal Consumption Expenditures (PCE) prices by 1–1.5% this year, pressuring consumer purchasing power and possibly tipping real disposable income and consumer spending into contraction during the middle quarters.

The ripple effects of these trade actions are already being felt. Share prices have plunged across Wall Street and corporate America, reflecting growing anxiety in the private capital markets. According to the Financial Times, top private equity executives are warning of a sharp slowdown in dealmaking and are preparing for the possibility of a recession impacting their portfolio companies. Many anticipate buyers and sellers will retreat from the market due to rising uncertainty, further delaying exits and putting pressure on firms to return capital to investors. Optimism from earlier in the year — when leaders like Blackstone’s Jonathan Gray and Carlyle’s Harvey Schwartz expected a recovery in deals and IPOs — has quickly faded.

These developments follow the March 27 announcement of 25% tariffs on auto imports, which J.P. Morgan projects could increase U.S. vehicle prices by over 11% and shave 0.2 percentage points off GDP growth, now revised down to 1.3% for the year. Inflation expectations have also been bumped up, with core PCE inflation now projected at 3.1%. As the trade policy outlook grows more uncertain, J.P. Morgan maintains its call for Fed rate cuts later this year, citing rising risks to growth, inflation, and the labor market.

What does this mean for global markets?

Tiffany Comprés, a board-certified international trade attorney, breaks down the growing legal and logistical risks businesses face in a recent interview with International Policy Digest. Key takeaways:

• Rising Legal Risk: Reciprocal tariffs disrupt pricing and supply chains, triggering contract disputes and compliance challenges.

• Incoterms Matter Now: Terms like FOB vs. DDP, often overlooked, now dictate who pays tariffs—forcing many to revisit contracts.

• Murky Legal Grounds: Broader tariffs may exceed presidential authority and clash with WTO rules, especially beyond national security cases.

• WTO on the Sidelines: With its enforcement arm stalled, global trade is shifting to regional deals like USMCA and TPP.

• Enforcement Hurdles: Scaling tariffs is tough—resource constraints already blocked the removal of the de minimis exemption.

• Adapt or Risk Trouble: Comprés urges companies to diversify, prepare for volatility, and tighten contracts—especially in seasonal sectors like agriculture.

Looking Ahead

This sharp shift in trade rules—where higher tariffs are being placed on imports from nearly every U.S. trading partner—is more than just a short-term disruption. It signals that businesses, investors, and everyday consumers need to prepare for a new kind of global economy. Supply chains may have to be reworked. Contracts will need closer attention. And expectations for market stability are now in flux. Whether this is a passing phase or the start of something longer-lasting, one thing is clear: companies that don’t adapt could find themselves caught off guard.

Let’s keep an eye on how these trade changes unfold—tariff updates are coming fast, and there’s likely more ahead.

How are you and your team adjusting so far? Always helpful to hear how others are approaching it.

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