[ROLLING ANALYSIS] Markets on watch for potential US reciprocal tariffs today

RECIPROCAL TARIFFS 

WHAT WE KNOW (Via WSJ)

• Timing: Trump plans to impose reciprocal tariffs as soon as this week (no confirmation) using executive action, bypassing Congress.
• Trump to impose reciprocal tariffs via executive action: The administration will match tariffs imposed on US exports by other nations
• Peter Navarro: Navarro is said to be the leading advocate for the reciprocal-tariffs. Peter Navarro has previously been described as a "trade hawk".

Who could be impacted: 

• EM countries likely to be hit hardest – Nations such as India, Brazil, Vietnam, Argentina, and other Southeast Asian and African economies have placed higher tariffs on US goods, particularly on agricultural commodities and autos.
• Large economies (such as Japan, the EU, and China) may have lower official tariff rates, they employ non-tariff barriers such as subsidies, VAT systems, and regulations that disadvantage US companies. The Trump administration is expected to factor in these barriers when calculating reciprocal tariffs, meaning these regions could face even steeper trade penalties beyond a simple tariff match, according to WSJ sources. 

Potential legal basis for tariffs:

• Section 301 of the Trade Act of 1974 – Allows tariffs against unfair trade practices.
• Section 338 of the Tariff Act of 1930 – Permits tariffs of up to 50% on nations that discriminate against US businesses.
• International Emergency Economic Powers Act – Could be invoked if Trump declares a national emergency, though this carries legal risks

HEADLINE UPDATES

• US President Trump responded "We'll see" when asked if reciprocal tariffs are still coming on Wednesday.
• White House said 25% steel tariffs would stack on other levies, according to Canadian press cited by Reuters.

EU-US UPDATES

• First Talks: The first conversation between European Commission President von der Leyen and US VP JD Vance yesterday was said to be "very constructive" and focused on areas where interests aligned, according to sources cited by the FT.
• EU meeting: EU trade minister will meet for a video call this afternoon; not expected to go into detail on a potential retaliation to US tariffs, but the purpose is to "display unity", FT reported.