Will Monday's market "roller coaster" be a preview of the entire year of 2025?

The "roller coaster" fluctuations in global markets overnight conveyed a deafening message to investors: Buckle up, 2025 is destined to be a bumpy ride. Over the weekend, Trump signed an executive order announcing tariffs on Mexico and Canada, leading to a collective decline in Asian, European, and American stock markets on Monday, while the dollar surged. The new tariffs were set to take effect on Tuesday, but according to reports from CCTV, Canada and Mexico reached a 30-day tariff suspension agreement with the United States, allowing the market to briefly recover some losses. Nevertheless, this turmoil still indicates that the uncertainty of Trump's tariff policy in 2025 may become the norm. Marko Papic, chief strategist at BCA Research, stated that "the continuous stream of tariff news" may continue to impact the market for most of this year. "Today is a microcosm of the future (market)," Papic said during a media interview on Monday morning, "Futures prices fell, and everyone panicked, even though by the end of the trading day, the market is likely to rise." Investors should take into account what has already happened and extend that into the remaining days of this year. Trump's tariff policy flip-flops, uncertainty dominates the market in 2025 Considering the frequent changes in Trump's tariff policy, Matt Rowe, head of cross-asset strategy at Nomura Asset Management, pointed out that the core dilemma in the current market is that "no one can clearly predict the boundaries of Trump's policy." Trump has hinted at possible tariffs on allies such as the EU and the UK, and there are even rumors that "comprehensive tariffs" have been included on the agenda. Rowe believes that Trump will ultimately stick to his guns and maintain tariffs for a period of time. Given Trump's frequent statements about reducing the trade deficit and bringing more manufacturing back to the U.S., Rowe questions whether his trade measures will stop here. However, many investors still view Trump's tariff threats as bargaining chips. For instance, Papic stated that he believes Trump is seeking to resolve issues through negotiations, while Goldman Sachs chief economist Jan Hatzius predicts that Trump's tariff policy "may be short-lived." Even Kevin Hassett, director of the U.S. National Economic Council, stated in an interview with CNBC on Monday that the Canadian government misunderstood the purpose of Trump's tariffs. However, once the U.S. tariff policy escalates comprehensively, the market is likely to be caught off guard. Jason Draho, head of Americas asset allocation at UBS Global Wealth Management, stated that the market's refusal to accept Trump's "serious" attitude, similar to the overnight market, may lead investors to be affected by more chaotic market movements in the coming months. The market has not yet considered the escalating risks of a trade war. Even Trump himself acknowledged that Americans might face some negative impacts from tariffs in the short term. Last Sunday, he posted on Truth Social: Short-term pain may be inevitable, but we will make America great again, and it will all be worth the cost. Corporate Earnings Face Potential Tariff Impact What does Trump's tariff policy mean for domestic U.S. companies? A team of strategists led by David Kostin at Goldman Sachs estimates that for every 5 percentage point increase in U.S. tariffs, the earnings per share (EPS) of S&P 500 companies will shrink by 1%-2%. Bank of America Global Research warns that the current tariff plans on Mexico and Canada could reduce S&P 500 corporate profits by 8%. Additionally, it is worth noting that U.S. companies' reliance on the Mexican supply chain has significantly increased compared to seven years ago. Bank of America strategists Savita Subramanian and Ohsung Kwon point out that the expanded exposure to Mexican imports will amplify the tariff impact. FactSet data shows that although 77% of S&P 500 companies have exceeded earnings expectations in the current earnings season, a new round of tariffs could overturn this trend. Risk Warning and Disclaimer The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk