Global News Summary 1 -5 April 2025

United States

• Tariff Escalation:

  • Trump announced sweeping 10% tariffs on all imports from 5 April, with sectoral surcharges reaching 20% (EU), 24% (Japan), and 54% (China).

  • Tariffs on Chinese goods may increase further depending on ByteDance's divestment of TikTok.

  • Trump defended the policy despite wiping out $5 trillion in equity value, calling the economy a “sick patient” needing “treatment”.

  • China responded by restricting outbound investment into the US and vowing retaliation.

• Fed Policy:

  • Chair Jerome Powell warned that the economic damage from tariffs is deeper than expected.

  • Fed remains cautious: no immediate rate cut, but money markets now price in 4 cuts in 2025, up from 3.

  • Austan Goolsbee and Adriana Kugler flagged upside risks to inflation and implied a wait-and-see stance.

• Macro Data:

  • Manufacturing PMI dropped to 49 in March (Feb 50.3), showing contraction.

  • Consumer sentiment fell sharply, and long-term inflation expectations hit the highest in decades.

• Market Reaction:

  • S&P 500 fell 6% on 5 April, the worst single-day drop since 2020.

  • Nasdaq 100 entered a bear market (down over 20% from peak).

  • VIX surged to April 2020 levels.

Canada

• Retaliation:

  • PM Mark Carney introduced 25% retaliatory tariffs on US vehicles.

  • He declared the old US-Canada trade model “over” and called for a comprehensive renegotiation.

  • Canada spared from new tariffs on 3 April but remains subject to existing steel and aluminium duties.

United Kingdom

• Trade Diplomacy:

  • Trump plans to impose 10% tariffs on UK exports; PM Starmer still hopeful of a bilateral trade deal.

  • UK proposed cutting tariffs below 10%; US signalled this might be accepted only with digital tax concessions.

• Domestic Policy:

  • £2bn pledged to build new affordable homes in FY26/27.

  • Spring Statement attempted to plug fiscal gaps with £14bn in cuts (including £4.8bn in welfare).

• Economic Data:

  • House prices stalled in March; PMI rose to 52, showing tentative growth.

  • Inflation eased to 2.8%, strengthening the case for BOE rate cuts.

Eurozone

• Response to Tariffs:

  • EU given 4 weeks to negotiate before retaliating against 20% US car tariffs.

  • France and Germany are leading the push for a strong EU counter-response.

  • EU weighing emergency measures to support impacted industries.

• Macroeconomy:

  • EZ inflation slowed to 2.2% in March, reinforcing ECB rate cut expectations.

  • German business confidence rose to 87.7 (Ifo expectations index).

  • Bund yields neared 3% on fiscal pressure from German defence spending plans.

Japan

• Trade Vulnerability:

  • Auto tariffs (24%) seen as a major economic risk.

  • Household spending fell 0.5% YoY, while Tankan index edged down to 12.

• Currency & Policy:

  • Yen surged as safe-haven demand returned.

  • BOJ Governor Ueda signalled continued tightening if markets remain stable.

Australia

• Tariff Impact:

  • Albanese labelled the 10% US tariffs on Australian goods “a poor decision”.

  • RBA flagged risks to investment and consumption from escalating global trade tensions.

• Budget:

  • Pre-election budget unveiled A$42.1bn deficit, with cost-of-living aid extended.

China

• Trade & Stimulus:

  • Caixin PMI rose to 51.2 – fastest pace in 4 months.

  • Economists expect a RRR cut in Q2 to release liquidity amid US tariff pressure.

• Policy Response:

  • Yuan fixed significantly stronger than expected to defend the currency.

  • Beijing restricted outbound investment into the US as leverage in upcoming talks.

Artificial Intelligence

• OpenAI: Finalised a $40 billion raise at a $300 billion valuation, backed by SoftBank.

• Alibaba: Unveiled Qwen 3, a multimodal AI capable of handling text, audio, and video on mobile devices.

• Replit: In talks to triple valuation to $3 billion.

• EU lawmakers push back on efforts to weaken the AI Act to favour US tech giants.

• CoreWeave: Slashed IPO size, reflecting AI infrastructure fatigue on Wall Street.

MARKET IMPACT & RISK THEMES

Recession Risk JPM cut US GDP forecast to –0.3% from +1.3% amid trade shock

Stagflation Risk Powell warned of slower growth + higher inflation combo

Equity Valuation S&P P/E still 22x, well above pre-recession norms

Volatility Spike VIX at COVID-era highs, fear dominating markets

Monetary Policy Fed stuck between inflation control and growth support

Currency Moves USD rose earlier but weakened on 4 April; safe-haven yen surged

Commodities Oil hit $62.66, 4-year low; Gold down on liquidity stress