Global equities have taken a hit over the past five trading days following the Trump administration’s announcement of sweeping reciprocal tariffs.
However, the magnitude of the market pullback varied significantly by region, offering deeper insights into how countries are positioned amid rising trade tensions.
One standout observation is that Chinese markets, despite being directly targeted with high reciprocal tariffs and having announced clear retaliatory measures, declined less than their peers. Meanwhile, Japan and the EU, traditionally close U.S. allies with relatively lower tariff exposure, saw steeper declines.
Recap of Country Responses to Reciprocal Tariffs
As of April 7, 2025
Source: Media reports, Mirae Asset Securities, CORE16
Interestingly, the EU has issued a retaliatory warning but is taking a two-phase approach, leaving room for negotiation. The bloc plans to impose €26 billion in tariffs by mid-April and stated that further countermeasures would follow a detailed review.
China’s relative market resilience likely stems from two key factors: its reduced dependence on U.S. trade compared to Trump’s first term, and its policy commitment to domestic demand stimulation, which has tempered investor anxiety.
The core insight here is that market reactions seem more aligned with a country’s domestic stimulus capacity and dependence on U.S. trade rather than the direct tariff rate itself.
[Compliance Note]
All posts by Sellsmart are for informational purposes only. Final investment decisions should be made with careful judgment and at the investor’s own risk.
The content of this post may be inaccurate, and any profits or losses resulting from trades are solely the responsibility of the investor.
Core16 may hold positions in the stocks mentioned in this post and may buy or sell them at any time.