President Donald Trump's sweeping "reciprocal" tariffs took effect Wednesday, with China ratcheting up retaliation. Delta Air Lines and Dow Jones giant Walmart pulled some guidance, citing tariff uncertainty. Long-term Treasury yields continued to surge, a sign of market stress, raising the possibility of an emergency Federal Reserve rate cut. JPMorgan Chase CEO Jamie Dimon a U.S. recession is now likely. President Trump isn't finished either, reiterating plans for tariffs on pharmaceuticals, slamming Eli Lilly, Pfizer, Merck and many other drug stocks.
Trump Tariffs Take Effect, China Retaliates
Huge new tariffs took effect at midnight Wednesday. President Trump announced the so-called reciprocal tariffs on April 2, which are actually based off trading partners' bilateral surpluses with the U.S.
The U.S. is charging a 20% tariff on imports from the European Union, 24% on Japanese goods and 46% on products from Vietnam.
Trump imposed a 34% "reciprocal" tariff on imports of Chinese goods, on top of an existing 20% enacted earlier this year. He added a further 50% tariff after Beijing announced a 34% retaliatory tariff on U.S. goods. That mean a 104% tariff on nearly all Chinese goods.
On Wednesday, China retaliated by hiking its tariffs on U.S. goods even further, to 84%. It also added more U.S. firms to its unreliable list.
The European Union approved a first round of retaliation vs. U.S. tariffs on steel and aluminum imports globally. More countermeasures are expected.
U.S. stocks rallied Wednesday morning, led by the Nasdaq, after futures had been volatile overnight, but generally solidly lower.
Delta Air, Walmart Pull Guidance On Tariffs
Kicking off industry results, Delta beat lowered first-quarter earnings targets early Wednesday, but revenue missed. Delta said "grow has largely stalled," generally guiding lower on Q2, as Trade trade policies hurt bookings. Delta pulled 2025 EPS guidance, "given the lack of economic clarity." It does expect "solid profitability and free cash flow for the year."
Delta stock rose strongly early Wednesday.
Walmart pulled first-quarter operating profit guidance, citing tariff uncertainty. The retail giant had forecast a 0.5%-2% gain in adjusted operating income. It still sees 3%-4% sales growth in the April-ended quarter.
Walmart, which sources goods from China, Vietnam and other countries, said it wants to "maintain flexibility to invest in price as tariffs are implemented."
Shares of the Dow giant rose solidly.
Treasury Yields Spike Worrisome
The 10-year Treasury yield jumped to 4.37% as of Wednesday morning after topping 4.5% overnight. The 10-year yield had already jumped 27 basis points in the prior two sessions. That's highly unusual action given the volatile stock market sell-off, which usually spurs a safe-haven run into Treasuries.
It's unclear what's driving the sell-off. There has been speculation that China or other trading partners are selling some holdings, or there is some unwinding of trades related to Treasury futures. Some investors may view the U.S. as less attractive or safe now, while others may simply be trying to raise cash any way they can.
In any case, the Treasury moves are unsettling, and underscore the significant stress financial markets are under. Investors now lean toward the Federal Reserve cutting rates in early May, with growing speculation of an emergency cut before then.
Rising yields will mean higher rates for mortgages and auto loans, further pressuring the economy.
The Treasury yield spike also is bad news for Treasury Secretary Scott Bessent's plan to refinance a massive wave of U.S. sovereign debt this year at attractive rates.
Drug Stocks Fall As Trump Pledges Pharmaceutical Tariffs
AbbVie, Eli Lilly, Pfizer, Merck, Bristol Myers, Amgen and Gilead Sciences were among the many biopharma giants declining early Wednesday.
Late Tuesday, President Trump said he'll impose major tariffs on pharmaceuticals in the near future. He's made similar threats in recent weeks. China retaliation vs. U.S. goods also could be weighing on drug stocks.
JPMorgan's Dimon: Recession 'Likely Outcome' From Trump Tariffs
"I think probably that's a likely outcome, because markets, I mean, when you see a 2000-point decline (in the Dow Jones), it sort of feeds on itself, doesn't it," Dimon said on Fox Business' "Mornings With Maria" show.
JPMorgan will report Q1 earnings on Friday. The banking giant's guidance and commentary on consumer and business lending will be closely watched.
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