Despite a quiet finish in equities, the market is repositioning ahead of April 2, when President Trump is set to announce a wave of “reciprocal tariffs” targeting trade imbalances. Long-only funds sold another $4B in equities last week, bringing four-week outflows to over $22B. Hedge funds cut net exposure to multi-year lows, favoring defensive plays like financials and energy over tech and consumer names.
‍

April 2 looms as a key pivot. Trump’s “Liberation Day” plan will impose tariffs on countries with tariffs against U.S. goods—what officials call the “dirty 15.” While narrower than feared, the tariffs are designed for immediate impact and could strain ties with allies like Japan, Germany, and Canada. Officials say this approach is meant to steer investment back to U.S. manufacturing and raise trillions in revenue to offset future tax cuts.
‍

Markets, meanwhile, are bracing for impact. Goldman calls the current tape a “nauseating grind,” with sentiment shifting daily amid inflation fears and tightening liquidity. Next week’s PCE data, GDP revisions, and $183B in Treasury supply will test risk appetite just as Trump’s trade reset hits.
‍

While some sector-specific tariffs (like autos) may be delayed, the broader shift is clear: global trade flows are being re-priced. For investors, April 2 isn’t just a headline — it’s a structural turning point in how capital is deployed, supply chains are routed, and policy risk is priced.

‍