On Wednesday, April 2, 2025, President Donal Trump announced new tariffs on nearly all U.S. Trading partners, including 34% tax on imports from China, and 20% tax on the European Union. Responding to what he considered an economic emergency, elevated tariff rates will be placed on several countries that run trade surpluses in the United States and a 10% baseline tax will be imposed on imports from all countries. The purpose behind these tariffs is to boost domestic manufacturing here in the United States, and at the same time bring in hundreds of billions in new revenue to the U.S. government and restore fairness to global trade.

Although the President campaigned on this policy, these so-called reciprocal tariffs were much more aggressive than anyone on Wall Street anticipated. The announcement triggered a plunge in the Stock Market. On Friday, April 4, 2025,  the S&P 500 closed down 5.97% and the Dow Jones Industrial Average was down 5.5%, both the biggest single-day declines since June 2020 during the COVID pandemic and the Nasdaq Composite dropped 5.8%. Some Trump officials acknowledge that there will be some short- term pain. How much pain before the gain has yet to be determined. 

According to Trump, these tariffs will force other countries to lower their import fees on U.S. goods and services. That will create a more balanced economic playing field for U.S. exports and a strong incentive for companies to manufacture goods in the United States. 

In retaliation, China announced on Friday, April 4, 2025, that they will be imposing a blanket 34% tariff on all American products. These tariffs are set to go into effect on April 10, 2025, the day after the Trump tariffs go into effect. 



In 1913, the 16th Amendment to the Constitution introduced a national income tax. Prior to this, tariffs supplied as much as 90% of the federal government’s revenue in the mid-1800s. The U.S. moved from tariffs to income taxes to raise more money to finance an expanding government, collect more revenue from the wealthy and make the economy more efficient by reducing trade barriers and encouraging competition. In 2024, tariffs accounted for less than 2% of Federal revenue, 51 % came from income taxes and 36% came from Social Security and Medicare Taxes.  Trump would like to replace income tax revenues with tariffs, allowing Americans to keep more of their hard earned money.

Goldman Sachs Chief U.S. Equity Strategist, estimates that every 5 percentage point increase in the U.S. tariff rate will cut S&P 500 earnings per share by 1%-2%. This year's estimated 22.5 percentage point increase implies a potential 4.5%-9% cut in S&P 500 earnings from Trump tariffs. Despite a boost to inflation as firms pass through some portion of tariffs to customers, the economic hit will likely prompt the Fed to resume rate cuts. That would proceed tax cuts, which could give the economy a shot in the arm to start 2026.

Tickers to consider:    JTAI, VNRX, ZVSA, FBRX

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