Tariff Uncertainty Weighs on Markets as Traders Brace for Post–April 2 Volatility

Trump’s “Liberation Day” Offers Uncertainty, Not Relief

Investors are bracing for increased market turbulence after President Donald Trump’s April 2 tariff announcement, dubbed “Liberation Day” by the administration. While the White House frames the move as a push for fairer global trade, Wall Street sees few signs of clarity.

With possible scenarios including a sweeping 20% tariff on most imports or targeted reciprocal duties, the lack of specifics is keeping traders defensive—and average investors may want to follow suit. In times like these, capital preservation and low-volatility strategies often take priority over aggressive growth plays.

Defensive Sectors Gaining Favor

With tariff and recession risks looming, many investors are pivoting toward traditionally defensive sectors. Consumer staples, healthcare, and utilities—all sectors that tend to perform relatively well during economic stress—delivered strong returns in Q1 2025.

Healthcare led with a 6.1% gain, followed by consumer staples at 4.6%, and utilities at 4.1%, all outperforming the S&P 500’s 4.6% decline. These sectors typically benefit from steady demand, even during downturns, making them attractive shelters when uncertainty rises.

Is a “Trump Put” Supporting Markets?

Fundstrat’s Tom Lee believes the Trump administration is watching the markets closely, and that a significant downturn could prompt a softening of tariff policy.

He points to signs the White House wants a stock market rebound to validate its trade stance and to avoid a recession, which would likely demand costly fiscal intervention.

Still, relying on political motivations as a market backstop remains a risky strategy, especially for retail investors with less room for error.

Lack of Finality Fuels Ongoing Risk

Though many hoped April 2 would deliver clarity, analysts see no sign of a clean resolution. New measures, such as a 25% tariff on goods from countries buying Venezuelan oil, and pending auto-related duties, suggest an evolving and potentially expanding tariff regime.

Without firm timelines or a definitive list of affected products, the policy outlook remains uncertain. That uncertainty continues to weigh on consumer sentiment, corporate planning, and equity markets.

Market Outlook: Stay Defensive Until Clarity Emerges

For now, the prudent move is to remain defensive. With the S&P 500 and Nasdaq still in correction territory and tariff-related news likely to remain in headlines, safer sectors and lower-volatility assets such as dividend-paying stocks, Treasurys, and gold offer more protection than aggressive plays.

Until the White House signals a pause or conclusion to its tariff push, both retail and institutional investors may want to prioritize capital preservation over chasing rebounds. Expect any relief rally to be short-lived unless meaningful policy clarity is delivered.

More Information in our Economic Calendar.