GCI Market Recap: Tariffs, Uncertainty, and What’s Next (3/24/25 – 3/31/25)
- Gold Crown Investing
- Mar 31
- 7 min read
Monetary Policy & The Fed
The Federal Open Market Committee (FOMC) met on March 19th, voting to keep interest rates steady between 4.25% and 4.5%. This comes at a crucial time with so much uncertainty in the market, which will be discussed throughout this article. As a student or regular consumer, this may not sound exciting on the surface, but it tells us that the Fed is still playing defense. 1
Why so defensive? Inflation remains persistent and is bringing the conversation of stagflation back and concerns that new tariffs could keep prices rising. This could also be a signal that the Fed is not cutting anytime soon, remember the Fed had dropped their rate cut projections to only twice this year before the start of the year. The goal is 2%, but the Fed emphasized maintaining maximum employment and price stability, as inflation has remained sticky and labor markets seem steady.
Key Fed Forecasts:
GDP Growth (2025): Revised down to 1.7%.
Unemployment Rate: Projected to rise to 4.4%.
Core PCE Inflation: Revised upward to 2.8%, signaling the ongoing price pressures consumers are facing.2
*Core inflation remains stubborn, impacting consumers because services like rent, insurance, and transportation have not cooled off much. Interest rates remaining high coupled with tariff uncertainty, put pressure on growth stocks and sectors that rely on cheap financing/costs.
March 24 – 30: Tariffs, Indicators and Looking Ahead
Tariffs
On March 26th, President Trump announced a 25% tariff on imported automobiles and key auto parts, set to take effect on April 3. The administration is projecting this move to generate $100 billion annually and aims to strengthen manufacturing in the U.S.3
What does this tariff do?
The tariff will make importing vehicles more expensive, thereby incentivizing consumers like you to opt for domestically produced cars. Since that expense will carry downstream to the customer through companies who rely on imported parts for the assembly of their vehicle. Hopefully, we see more domestic production, in turn creating more jobs within the auto industry and keeping competition high.
These tariffs do not come without potential consequences especially globally. We may see potential retaliatory measures amongst international trade partners who rely on those exports. This would lead us to a broader trade conflict and increase the trade war conversations we are currently in.
Winners: Tesla & Rivian
Electrical vehicle (EV) producers like Tesla and Rivian manufacture all their vehicles in the U.S. In 2024 approx. 78.9% of battery electric vehicles sold in the U.S. during the 3rd quarter were produced in North America. EV makers can either maintain their pricing or make smaller increases giving them a competitive advantage over producers that are international like Toyota & BMW, whose price increases due to tariffs will be higher and passed down to the customer.4
Losers: Toyota, BMW, Ford
These non-U.S. carmakers import a massive portion of their vehicles into the U.S. from South Korea, Japan, Europe, and other countries. Even U.S.-based manufacturers like Ford and GM rely on global supply chains as many parts come from foreign plants even if they are assembled in the U.S. This will ultimately cause higher prices, lower demand, and less of a competitive advantage.
Analyst Expectations
The 25% tariff is applied on top of the base price, which directly impacts retail prices. Expect a $3,000 increase for U.S.-assembled cars that rely on imported components (Ford & GM). A $6,000 increase for fully imported vehicles (Luxury cars from Europe or Japan). These automakers may try to absorb some of these costs short-term but over time it will be passed on to consumers.5
Broader Implications
Used car prices could also rise due to increased demand if new vehicles become too expensive. Auto loan balances could increase due to the price increases. All this combined could feed into inflation putting upward price pressure.
Indicators
Friday, March 28 alone: The S&P 500 dropped 2% while having the worst week in 2025 and the Nasdaq fell 2.7%. Market sentiment continues to weaken due to a mix of rising inflation concerns, weak consumer data, and corporate earnings downgrades.
The weak consumer data from February still lingers including a drop in Consumer sentiment down to 67.8 from 70.6 indicating how consumers feel about their finances, job prospects, and the broader economy. There are many other indicators however to keep this concise this week, we will fill you in on the new key indicators for March which will be released in early April and will be talked about here.
This week the CBOE Volatility Index (VIX) rose from 17.48 to 22.28, signaling heightened uncertainty in the market. The VIX can also be seen as a fear gauge as it measures the expected volatility in the S&P over the next 30 days. This increase in the VIX can be seen as investors becoming more risk-averse which can lead to lower equity prices and an increase in safer assets.
*Market Watch is a great tool to keep up with key dates and releases of indicators (link in sources).
Corporate Earnings Downgrade – A Red Flag
Of the 107 S&P 500 companies that issued earnings guidance for Q1 2025: 68 gave negative guidance (meaning they expect to earn less than analysts were predicting). This is well above the 5-year average (57) and 10-year average (62).6
Companies are signaling that rising costs, shaky consumer demand, and economic uncertainty are hurting their profits. Lower earnings also mean lower stock valuations which is pressuring the markets. Another possibility is that businesses may cut hiring, delay investments, or scale back on any expansion plans, all of which can slow the economy even further.
Looking ahead
The major headline for this week is April 2: Liberation Day: Tariffs Incoming. President Trump plans to announce a broad set of reciprocal tariffs (imposing equivalent tariffs on imports from nations that have taxed its exports), starting with a 25% levy on imported cars and more expected on tech, pharmaceuticals, and agriculture.
Why it matters?
The goal is to make trade fairer, but there is the risk of sparking continued retaliation and a trade war, in turn, raising costs for businesses and consumers. These respective sectors may suffer if other countries strike back, reducing global demand. Markets seem to be pricing this into their targets (ex: S&P 500 target cut by Barclays from 6,600 to 5,900, lowest by any firm)7, and many seem to believe these announcements will be a larger negative surprise than most think. We see stocks falling due to this uncertainty.
Labor Market & This Week’s Economic Data
On Friday we will receive the March jobs report, with expected job gains to be lower than last month at 135,000. Key things to watch: Job openings decreasing potentially signaling softening demand and slowing wage growth which could ease inflation but weaken household spending.
This Week’s Macro Calendar:
Monday: Chicago PMI, Dallas Fed
Tuesday: Job openings, ISM Manufacturing
Wednesday: ADP Payrolls, Factory Orders
Thursday: Jobless Claims, ISM Services, U.S. Trade Deficit
Friday: Nonfarm Payrolls, Wages, Unemployment
*Markets will move on data, not earnings this week.8
To Sum It Up
The U.S. economy is facing crosswinds as inflation remains sticky, growth shows signs of slowing, and policy uncertainty rises. The theme is uncertainty, and markets are increasingly volatile as investors weigh the risks of trade disruptions, high interest rates, and weakening consumer sentiment.
This coming week will be crucial to how markets react in the future and where our economy is heading. The question we are continuing to look at “Are the talks about tariffs continued negotiation tactics, is it the real deal, and if so who and what is affected?” Continue to stay tuned in the markets with us and we will be back next week to sum up the week.
Written by: Inder Rehal, Ethan Dehority, and Alex Hardig
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