Liberation Day tariffs trigger global equity selloff

The Trump administration announced sweeping reciprocal tariffs after market close on April 2 2025, labeled "Liberation Day." The package included a universal 10% tariff on all imports plus country-specific higher rates ranging from 20% (EU) to 54% (China), calculated based on trade deficits. Treasury Secretary Bessent announced the policy, and the administration framed it as corrective to three decades of perceived trade imbalances.

Markets closed April 2 slightly higher as futures initially rose during the announcement on hopes that the headline rates would be negotiating positions rather than final policies. That interpretation reversed sharply the following session when overnight trading showed the S&P 500 futures limit-down and broad global equity selloffs. The April 3-7 period saw the S&P 500 fall 12% in three sessions, one of the fastest declines in modern history.

The Liberation Day session itself marked the inflection point in 2025 markets. Prior to April 2, the market had been range-bound in the 580-615 SPY range since February. The announcement shifted regime from rate-driven to trade-driven. Gold broke $3,000 decisively, the dollar weakened, and correlations between asset classes realigned around tariff exposure rather than Fed expectations.