“Liberation Day” is here. Now what for the economy?

Today marks what President Trump has referred to as “Liberation Day.” This afternoon, he is set to announce a new round of tariffs during a press conference in the Rose Garden. Heading into the press conference, there has been a lack of clarity on what the final specifics will be. This uncertainty is reflected in our investment bank's wide range of potential effective tariff rates, as shown in the accompanying chart.

Ultimately, the final decisions will depend on how the Trump administration balances its goals of generating revenue, reducing trade imbalances and implementing "fair" trade policies. Another factor to consider is how pursuing these goals might affect economic growth and whether the administration might relax tough tariff policies if U.S. growth significantly weakens.

Given this uncertainty, what should investors do? While it likely sounds repetitive, diversifying across geographic regions and asset classes remains a key strategy to manage heightened uncertainty. For investors with meaningful exposure to U.S. equities, we would consider diversifying into assets such as international equities, core bonds or gold. Although these asset classes have different return and risk profiles, they have varied return drivers that may reduce exposure to any single economic environment. As we noted yesterday, the first quarter of 2025 demonstrated the benefits of diversification, as most assets we track (aside from U.S. equities) ended the quarter positively, offering balance to global multi-asset portfolios.

We will learn more about the administration's tariff policy direction later today and will return tomorrow to share our latest insights.

All market and economic data as of 04/01/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

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