US futures rise, global markets rally on expectation of reduced tariff impact

In little more than a week from today, a wide range of President Trump’s tariffs will be both reciprocal and sector-specific; or will they?

Uncertainty remains about exactly what levies will be imposed on trading partners in order to achieve what the president considers fairness in their relationship with the United States.

This uncertainty was further clouded late last week as Trump appeared to offer an olive branch.

“I don’t change. But the word flexibility is an important word,” Trump said. “Sometimes it’s flexibility. So there’ll be flexibility, but basically it’s reciprocal.”

The US president also said that he hopes to meet with China’s Xi Jinping soon for trade talks and, laying the ground for this, Sen. Steve Daines (R-Mont.) met with the Chinese president over the weekend.

Last week, Ronald Temple, chief market strategist at Lazard, joined InvestmentNews anchor Gregg Greenberg to discuss ways in which investors can protect their portfolios from the uncertainty surrounding the President’s tariff policies.

S&P 500 futures gained almost 1% in early trading Monday on hopes that the most damaging tariffs might be avoided. While reciprocal tariffs on those countries with significant trade with the US are still expected to proceed, broad levies on sectors such as cars, pharmaceuticals, and semiconductors may not. White House officials hinted that they would not come into force on April 2 in any case.

“Markets have taken some comfort from news that the next stage of the Trump administration’s tariff regime will involve targeted tariffs,” Daniel Murray, chief executive officer of EFG Asset Management told Bloomberg. “This raises the possibility that some sectors and countries may fare better than others, helping explain market optimism.”

Metals, especially copper and aluminum are also trading higher amid speculation that tariffs will be less wide reaching. Gold is steady and trading close to its record high.

Last week, the Fed downgraded its growth outlook for the US economy, despite chair Jerome Powell acknowledging the apparent health of the economy currently that belies current sentiment and high uncertainty.

"Clearly some of it, a good part of it, is coming from tariffs," he said, adding that "Progress is probably delayed for the time being.”

For America’s largest trade partner, Canada, recently installed prime minister Mark Carney called a general election Sunday, with Canadians going to the polls on April 28. Both Carney and his challengers are talking tough on trade with the US as they weigh the potentially devastating impact of their own economy.