The US plan for reciprocal tariffs and what to know for the week ahead

The countdown is on for the US “reciprocal tariffs” policy. Slated to set in on April 2nd, these tariffs aim to reduce trade discrepancies between the US and its trading partners. The exact details haven’t been worked out yet, not least because the president also wants levies to reflect “non-tariff barriers” – like difficulties in accessing markets or restrictions on certain imports. But broadly, the US will shoot to even out trade deficits, plus a fee matching the trading partner’s Value Added Tax (VAT).

Not only are the final levies still to be decided, but the US has said it’s open to negotiation. Some trading partners, like India, have already suggested that they’ll strike an agreement with the States to avoid higher rates, and more will likely follow.

The effect on trade and, in turn, the US economy and global stock markets will depend on how broad these reciprocal tariffs are – namely, the number of countries and products impacted. 

The Federal Reserve said last week that tariffs’ impact on inflation may only be transitory, lasting for just one year and leveling out afterward. But central banks aren’t psychics. Many said the inflation that spawned from the pandemic would be transitory – then they were forced to raise interest rates from 0% to between 5.25% and 5.50%, the biggest rise in 40 years. As we know, those rates still haven’t concretely tamed runaway prices.

On the calendar 

• Monday: Europe purchasing manufacturing index (April), UK purchasing manufacturing index (March), UK services PMI (March), US purchasing manufacturing index (March). 
• Tuesday: US consumer confidence (March), US new home sales (February), US manufacturing index (March).
• Wednesday: UK inflation (February), UK producer price index (February), US durable goods orders (February), China industrial profit (February).
• Thursday: US corporate profit (quarter four), Japan: Tokyo consumer price index (March). Earnings: Lululemon.
• Friday: UK retail sales (February), Europe economic sentiment (March).

What you might’ve missed last week

US

• The Federal Reserve (Fed) left interest rates unchanged, but worsened its forecasts for the economy, inflation, and jobs market.
• Nvidia announced plans to push hundreds of billions of dollars into US-based chips and electrical manufacturing.
• Investors reportedly valued X at $44 billion in a secondary market deal, bringing the social media platform back to Elon Musk’s takeover price for the first time.

Europe

• Germany approved a $1 trillion fiscal package focused on defense and infrastructure.

Asia

• BYD revealed an EV battery system that can charge a car in five minutes, far faster than Tesla’s current offering.
• The Bank of Japan didn’t touch interest rates, but economists think they’ll likely be hiked later this year.

UK

• The Bank of England (BoE) left interest rates where they were, despite the economy crying out for a helping hand.
• First-time buyers accounted for a record share of UK home loans last year, as falling borrowing costs improved affordability.
• Some of the world’s biggest pharmaceutical companies warned that the UK is becoming “uninvestable” due to an ongoing dispute over drug rebates.
• Payments firm Klarna Group filed for a US IPO, potentially making it one of the year’s biggest financial listings.
• Food manufacturer Bakkavor rejected two takeover bids from Greencore, including the latest offer valuing the company at £1.14 billion ($1.48 billion).

Why it matters

Nvidia has pledged to spend hundreds of billions of dollars to make chips and other electronics in the US over the next four years. Not only does this decision demonstrate the impact of the US president’s “America First“ trade policies, but it also reassures investors that there’s still plenty of money in the AI infrastructure sector. Remember, DeepSeek’s efficiency sparked concern that spending would slow down, but Nvidia maintains that clients are spending more on chips instead.

The Federal Reserve left interest rates unchanged on Thursday, with most central bankers sticking to their previous forecasts of two rate trims this year. Mind you, the Fed did downgrade its predictions for the US economy, inflation, and unemployment numbers compared to December’s expectations.

BYD’s new “super e-platform” can deliver 1,000 kilowatts of digital fuel in five minutes – enough to power a 249-mile joyride. The Chinese carmaker’s system is nearly four times faster than Tesla’s current iteration, making it the fastest charging setup on the planet. BYD will start by rolling out 4,000 systems across China – but by addressing a common complaint of charging times, the firm should be able to keep nabbing market share from global rivals.

Investors valued social media platform X at $44 billion this week, marking the first return to Elon Musk’s purchase price since the takeover happened. That’s a sharp rebound from September’s $10 billion figure, likely spurred on by Musk’s unofficial position in government, the firm’s new 25% stake in xAI, and the return of key advertisers like Amazon.

The Bank of England kept interest rates on hold at 4.5% but hinted that a cut could come as soon as May. The UK’s central bank needs to tread carefully, after all, weighing up the prospect of an inflation reboot against the economy and job market’s cries for support.  

First-time buyers have dominated the UK mortgage market, accounting for a record 54% of all home loans in the past year. Easing borrowing costs, real wage growth, and soaring rents have made homeownership a more attractive alternative, pushing demand for bigger properties. Still, with the Bank of England continuing to sound a cautious tone on rate cuts, the housing market’s momentum could face headwinds yet.

Meanwhile, pharmaceutical companies are sounding alarms over the UK’s investment climate. Global drugmakers, including AstraZeneca and Johnson & Johnson, warn that a controversial rebate system – one that requires firms to return up to a third of their NHS drug revenues – is making the UK “uninvestable.” The industry’s frustration reflects broader concerns about government policy unpredictability and funding constraints, raising doubts about Britain’s ambitions to be a global life sciences leader.

In contrast, the UK’s fintech sector has been seeing major moves. Klarna, the Swedish payments giant with deep British ties, has filed for a US IPO, targeting a valuation of over $15 billion. This marks a significant milestone in the buy-now, pay-later market, underscoring continued investor appetite for fintech despite past volatility. Klarna’s US listing, however, highlights a challenge for the UK: top homegrown and foreign-founded fintechs have a habit of looking overseas for capital, which raises concerns about London’s competitiveness as a financial hub.

On the corporate front, Bakkavor has rebuffed two takeover bids from rival food manufacturer Greencore, arguing the offers undervalue the company. While Greencore sees a merger as a strategic opportunity for growth, Bakkavor’s rejection and surging share price suggest shareholders believe the company can thrive on its own.

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