As the U.S. tariff policy is set to be unveiled on April 2, market uncertainty will reach new heights, and investors need to buckle up for the turbulence!
According to a report by CCTV News on Saturday, it was learned on March 28 local time that U.S. President Trump plans to announce new tariffs in the coming days. He expressed a somewhat open attitude towards reaching tariff agreements with other countries but hinted that any agreements would be made after the tariffs take effect on April 2.
When asked if this would happen before the announcement of the tariff increase on April 2, he said, &#34;No, it will likely be later.&#34; Trump also reiterated plans to announce drug tariffs but refused to disclose the specific rates of these tariffs.
In its latest report, Citigroup summarized three main scenarios and their corresponding market impacts. The first is the announcement of only reciprocal tariffs, which would result in a relatively limited market reaction; the second is reciprocal tariffs plus value-added tax (VAT), which could lead to an immediate increase of 50-100 basis points in the dollar index and a potential decline in global stock markets; the third scenario includes industry-specific tariffs in addition to reciprocal tariffs and VAT, which could result in a more severe market reaction.
After the S&amp;P 500 faced its worst quarterly start since 2020, analysts have warned that the potential for further declines outweighs the chances of an increase. Some analysts pointed out that future tariffs and retaliatory actions are key, stating, &#34;The market reaction on April 2 will largely depend on the timing of the tariffs, especially industry tariffs and the speed of other countries' responses to the reciprocal tariffs.&#34;
<h2>Three Major Tariff Scenarios</h2>
The Citigroup report noted that with the announcement of tariff measures approaching on April 2, three main scenarios were summarized based on survey results, along with their market impacts:
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Scenario 1: Announcement of only reciprocal tariffs: If the Trump administration only announces reciprocal tariffs based on the simple average tariff gap of Most Favored Nation (MFN) on April 2, this would be a relatively mild outcome. According to a survey by Nomura Securities, about 25.5% of respondents believe this scenario could occur, with countries like India, Thailand, and Indonesia potentially being the most affected. In this case, the market reaction may be limited, and the dollar index may not experience significant fluctuations.
Scenario 2: Reciprocal tariffs plus value-added tax (VAT): If the tariff policy includes VAT, this would be a more aggressive move, potentially triggering risk aversion and a stronger dollar. In this scenario, Germany's MFN tariff gap (including a 19% VAT) is 20.4%, France is 21.1%, and Spain is 21.8%. The Asia region also faces risks, with Japan at 10.5%, India at 29.5%, and Thailand at 13.0%. This scenario could lead to an immediate increase of 50-100 basis points in the dollar index (DXY) after the announcement, but at the same time, the dollar may weaken against the yen, and global stock markets could decline. Asian interest rates may fall, with India and Thailand potentially decreasing by 5-7 basis points
Scenario 3, More Aggressive Tariff Policies: In addition to reciprocal tariffs and value-added taxes, there may also be industry-specific tariffs. For example, Trump previously announced a 25% tariff on imported finished vehicles (potentially affecting Mexico, South Korea, Japan, Canada, and Germany) and hinted at possible tariffs on semiconductor chips and pharmaceuticals (with South Korea and Singapore being the most affected). Additionally, there may be no extension of the 25% tariff deadline on Mexico and Canada, or tariffs imposed on countries importing Venezuelan oil. In this scenario, market reactions could be the most severe, with the dollar index potentially strengthening further, while the dollar against the yen could see a significant decline.
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<h2>The Market Prepares for Turbulence!</h2>
The &#34;roller coaster&#34; journey of U.S. stocks has just begun, with the S&amp;P 500 index heading towards its worst first-quarter performance since 2020, and the upcoming tariff policies may further exacerbate market volatility.
The tariff policy statement on April 2 will reveal which countries and industries the Trump administration will target, and the market is expected to experience significant fluctuations, influenced by the severity, duration, target countries and industries of the tariffs, as well as retaliatory measures from trade partners.
Mark Malek, Chief Investment Officer at Siebert Financial, stated:
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I am a firm bull, but I want to tell you that from now until next week, especially before the earnings season begins, the potential for a decline in U.S. stocks is greater than the potential for an increase.
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Michael Arone, Chief Investment Strategist at State Street Global Advisors, stated:
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Uncertainty continues to plague the market, bringing volatility, and there may be more fluctuations on April 2 and after the deadline.
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Angelo Kourkafas, Senior Investment Strategist at Edward Jones, stated:
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The statement on April 2 may &#34;not be a one-time event&#34;; it is an important milestone, but ultimately it does not completely eliminate all uncertainties.
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Matthew Aks, Senior Strategist at Evercore ISI, cautioned:
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The market reaction on April 2 &#34;will largely depend on&#34; the timing of future tariffs, especially industry tariffs, and the speed of other countries' responses to reciprocal tariffs. If other countries take retaliatory actions, this will pose the risk of an escalation cycle, potentially undermining any sense of relief.
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According to CCTV News, Trump, while on &#34;Air Force One&#34; heading to Florida, was asked by reporters whether he would be willing to discuss reaching an agreement to lower tariffs on the U.S. with countries like the UK, to which he replied, &#34;If we can get something out of this deal, it's possible—but you know, we have been taken advantage of for 40 years, or even longer. That won't happen again. But yes, I would certainly be open to it.&#34;

Citigroup summarized three scenarios in its latest report: first, only reciprocal tariffs, with limited market reaction; second, reciprocal tariffs + Value Added Tax (VAT), where the US dollar index could immediately rise by 50-100 basis points, and global stock markets would also decline; third, reciprocal tariffs + Value Added Tax + industry-specific tariffs, where the market reaction could be even more severe. Analysts have warned that the likelihood of a subsequent decline in US stocks is greater than that of an increase, and some analyses indicate that future tariffs and retaliatory actions are key

- As the U.S. tariff policy announcement approaches on April 2, market uncertainty is expected to peak, prompting investors to prepare for volatility.  
- President Trump plans to unveil new tariffs, indicating a willingness to negotiate but suggesting any agreements will follow the implementation of tariffs.  
- Citigroup outlines three potential scenarios for the tariffs, each with varying impacts on the market, including limited reactions to reciprocal tariffs and more severe consequences if industry-specific tariffs are introduced.

"April 2" Trading Manual: Three Possible Scenarios