A.M. Edition for April 2. Markets are on edge ahead of President Trump’s long-awaited tariff announcement in the Rose Garden later today. Neuberger Berman’s Maya Bhandari explains what market signals tell us about the likely scope of the U.S. actions. Plus, a liberal judge wins the Supreme Court race in Wisconsin in a rebuke of Trump and Elon Musk. And a potential TikTok takeover deal takes shape days ahead of a deadline to sell the platform or shut it down. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are the key topics of today's episode?
Investors hold their breath ahead of President Trump's long-awaited tariff announcement later today. Plus, a liberal judge wins the Supreme Court race in Wisconsin in a rebuke of Trump and Elon Musk.
Wisconsin stood up and said loudly that justice does not have a price. Our courts are not for sale.
And we'll look at a potential TikTok takeover deal just days ahead of a deadline to sell the platform or shut it down. It's Wednesday, April 2nd. I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today. We are mere hours away from the announcement of new U.S.
Chapter 2: What is the significance of Trump's upcoming tariff announcement?
tariffs, which President Trump is set to unveil at a White House press conference after the close of markets. We report that so-called reciprocal tariffs are expected and that whatever measures are announced will take effect immediately, though the precise contours of the likely sweeping announcement remain under wraps.
Well, as we await the news, we've got Maya Bondari with us to preview the coming trading day and beyond. She is the chief investment officer for multi-asset EMEA at asset manager Neuberger Berman. Maya, we half expected that by this point we would have a sense of what was going to be announced today. Alas, as it stands, we don't.
Could you read the tea leaves, though, a bit on what might be coming?
Chapter 3: How might the new tariffs impact global trade?
it does seem likely that what we learn today is going to include some non-tariff measures, capturing things like currency undervaluation as a possible gauge, which is about 15-odd percent when you weigh it by U.S. trade partners. VAT, an area of particular focus here in Europe, but also around 15 percent. And as you see with these numbers, Luke, the range is wide, uncertain.
And at Neuberger Berman, we wouldn't rule out a high starting point, perhaps even as high as 20% for major trading partners. But we would also emphasize two other points here. First, and importantly, this is likely to be a negotiation, a point Treasury Secretary Besant made quite clearly, including yesterday, reflecting on today's announcement as, quote, unquote, a cap.
So a final number is likely to be lower. And second, kind of in keeping with this conclusion, tariffs to date sort of take the U.S. effective rate from about two and a half percent to about seven percent. So the numbers we're speaking of here are a meaningful increase that would take us back to, you know, the sort of tariff regime we lost in the 1940s.
And so on balance, our judgment is that these are unlikely in full force.
Chapter 4: What are the potential economic repercussions of these tariffs?
And we do know, Maya, 15 countries are likely to be targeted here, just a few out of the whole world. And yet there could be some massive economies directly affected here with repercussions for a big chunk of global trade.
Absolutely. And so we're talking about some of the U.S. 's largest trading partners, countries like Mexico, Canada, Europe, China, of course. But when we put these countries together, these 15 countries, they together account, Luke, for about 90 percent of U.S. imports. So we are covering, if you will, the lion's share of U.S. trade partners.
Now, there's been a little bit of to-ing and fro-ing on that overnight. So I think for our listeners, perhaps the most important takeaway here is that what is being discussed could be very disruptive indeed to a highly integrated global economy. But this is going to be a negotiation and uncertainty is here to stay because what we didn't come to is how other countries respond.
And I think that is perhaps one of the bigger risks out there. So, for example, sitting where I'm sitting in Europe, there have been discussions of deployment of the anti-coercion instruments, or the ACIs in jargon, in order to respond to the tariffs that may be announced today.
Namely, to go after the services sector, right, taking this beyond goods.
Yeah, I mean, these are a serious toolkit. It absolutely takes the trade war, if you will, to services in addition to goods. But in practical terms, the ACI can be used to restrict the activities of banks. It can be used to revoke patents. It can be used to prevent companies receiving revenues from software updates or streaming. So it is significant.
And in addition, so far, we've also heard from the U.S. administration that any such counter response will be met with another response. So you can see how this could get quite messy.
A bit of a messy outlook there. What does that mean for markets? Small stocks, for instance, on the Russell 2000 have been suffering more than other corners of at least the U.S. markets lately.
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Chapter 5: How are markets reacting to the tariff uncertainties?
Absolutely. I mean, you know, I like to say that every risk has attached to it a price. For example, the U.S. tech stocks that have been hit harder by this uncertainty, you know, they're down, what, 14, 15 percent this year, about three times the broader index.
Now, I should say that, you know, at Neuberger Berman, we have been neutral equity markets overall, but actually have been favoring the non-MAG7 stocks, so the other 493 stocks in the S&P 500. And And that's played out relatively well so far.
I'd say more recently, you know, while small cap is clearly an area that's baked in some bad news, you do need typically a trigger for these companies to start outperforming. And we can't quite see what that trigger will be. More recently, we have actually been expecting a broadening out away from the U.S. to the rest of the world, in particular areas like Europe and Japan.
One of the consequences of recent geopolitical developments, of course, has been a really significant shift in European fiscal policy. And that's something that we're quite keen to capture in our asset allocation as well.
Maya Bandari is the chief investment officer for multi-asset EMEA at asset manager Neuberger Berman. Maya, thank you so much for joining us on What's News.
My pleasure.
Thank you.
Voters in Wisconsin have elected liberal judge Susan Crawford to a seat on the battleground state's Supreme Court, cementing its four to three liberal majority. The result could suggest a voter pushback against President Trump 10 weeks after his inauguration and deals a blow to Elon Musk, who, along with groups tied to him, spent at least $20 million to support Crawford's conservative opponent.
Here was Crawford after her victory.
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