Inside Markets — Tariff Announcement

A ‘better-than-feared’ tariff announcement would likely include a low (~10%) blanket tariff that doesn’t include VAT and cancels/replaces Canada/Mexico tariffs. The better than feared scenario would also include a willingness to discuss sectoral tariffs that include 25% steel/aluminum/autos and potential tariffs on semis/pharmaceuticals. This type of outcome would include a higher-than-expected blanket tariff (>20%) which includes VAT plus announced sectoral tariffs. This scenario would likely result in -1-1.75% downside in the SPX. The worst possible outcome for equity markets (SPX -2%-2.5%) would also include additional tariffs on shipping vessels and a full ban of semiconductors sales to China.