Trump tariff announcement “doesn’t feel fully priced in” – Wolfe Research

The full impact of U.S. President Donald Trump’s much-anticipated tariff announcement on April 2 has yet to be priced in by markets, according to analysts at Wolfe Research.

In a note to clients on Tuesday, the analysts led by Tobin Marcus said that although a sell-off on Friday helped put markets “closer in line with market expectations,” most sell-side investors are now calling for Trump to roll out larger-than-projected reciprocal tariffs.

Trump has proposed introducing tariffs that would match foreign duties placed on U.S. goods, as part of an effort to correct perceived trade imbalances. The president has also argued that slapping levies on both friends and adversaries alike will help raise government revenues and bring manufacturing jobs back to the country.

However, some economists have warned that the duties will refuel inflationary pressures and weigh on growth, leading to a period of so-called “stagflation.”

Jitters over the prospect of the tariffs have dented sentiment among investors, who had initially been hopeful that Trump would usher in more pro-growth and business-friendly policies, for much of the first quarter. The benchmark S&P 500 index slipped to its worst first three months of a year since 2022.

Despite lingering hopes that Trump could use the tariffs as a bargaining chip and will ultimately be short-lived, the moves could prove to be more durable, the Wolfe analysts argued.

“Trump is determined to orchestrate a restructuring of the U.S. economy and the global trading system, and he sees big tariffs as his strongest tool for achieving that vision, not just a source of negotiating leverage,” they wrote.