In the past few days, there has been a drop in stock prices as investors process President Trump's latest tariffs. The upcoming week is anticipated to bring more attention to the situation, with a tariff deadline known as "Liberation Day" set for April 2. Investors are eager to know to what extent Trump will enforce tariffs on trade partners and if this will escalate the trade war further.

Veda Partners' Henrietta Treyz stated that the market will need to carefully consider the impact of these tariffs, which may not yet be factored into prices. Meanwhile, Barclays' Ajay Rajadhyaksha emphasized that Trump's recent introduction of 25% auto tariffs on foreign vehicles is significant and may hint at what's to come on April 2.

There is growing concern in the market that higher-than-expected tariffs could worsen existing negative sentiments and potentially slow down economic growth. Several Wall Street firms, including Barclays, have revised their S&P 500 year-end targets downwards due to the impact of tariffs. If the actual tariff rates end up surpassing estimates, there could be increased downside risk for stocks and a risk of economic recession.

Both Goldman Sachs and Barclays warn of potential surprises to the downside next week due to the possibility of higher tariff rates than what the market anticipates. Administration officials have indicated that the proposed tariff rates are meant to initiate negotiations, which could lead to initial rates higher than expected.