Tariff shock and recovery: April 2025

April 2025 was one of the most volatile months in US equity history. The month began with the S&P 500 near 562, range-bound in the 555-615 corridor that had persisted since February. Liberation Day tariffs announced April 2 triggered a violent reassessment of all US assets. By April 7 close, the S&P had fallen to 496, a 12% decline in three sessions, the fastest of its magnitude since March 2020.

The April 9 tariff pause announcement produced a 9.52% single-day rally, the largest since October 2008. Subsequent sessions saw further recovery as the China-specific 125% rate was perceived as manageable and bilateral negotiations commenced. The S&P 500 closed April at 563, essentially flat on the month but with the realized volatility of a full bear market compressed into six sessions.

The month introduced structural changes to US markets. Gold established above $3,000 as a permanent tariff hedge. The dollar weakened despite US rate differentials, signaling concern about longer-term US policy credibility. Correlations between asset classes broke down during the April 2-7 panic and have remained elevated since. Sectors with China supply chain exposure (tech, consumer goods, automotive) embedded permanent risk premiums. The Fed's June 2025 meeting would pivot dovishly in response to the tariff-related uncertainty.