Trump's 'Jaw-Dropper' Tariffs To Hit Tech Stocks Hard, Says Analyst: Retail Panics On 'Worse Than The Worst-Case Scenario'

President Donald Trump announced his "Liberation Day" tariffs at a Rose Garden ceremony in the White House on Wednesday. He imposed a 10% baseline tariff on all imports and a higher rate for those countries he deemed "bad actors."

The reciprocal tariffs on Japan would be 24% and that on the European Union 20%.

These tariffs are set to take effect on April 9. 

While Canada and Mexico have been exempted from reciprocal tariffs for now, Chinese imports have been hit with a new 34% levy, taking the base-rate tariff for these goods under the Trump administration to 54%.

Wedbush analyst Daniel Ives called the slate of tariffs "worse than the worst-case scenario."

Ives said the "jaw-dropper" was the tariff on China, 32% on Taiwan, and 20% on the European Union.

There will be some exceptions around different products/technology components/auto parts around the level of tariffs, he added.

Ives expects tech socks to be under significant pressure on the announcement due to worries concerning demand destruction and supply chains. According to the analyst, the China and Taiwan tariffs will bite especially hard.

The Wedbush analyst noted that Apple produces almost all its iPhones in China. Ives said the moot point would be around exceptions/exemptions to this tariff policy and whether the impacted companies are building more operations/factories/plants in the U.S. 

Although the White House will likely say it wasn't looking for deals, Ives believes there will be "off-ramps and major negotiations" with various countries and companies over the coming months.

On Stocktwits, retail sentiment toward the Invesco QQQ Trust (QQQ), an exchange-traded fund that tracks the Nasdaq 100 Index, flipped to 'bearish' by the end of Wednesday's session from the 'bullish' mood that prevailed a day ago.

QQQ sentiment and message volume, as of 10:01 pm ET, April 2 | source: Stocktwits

A bearish user began to fear a 2008-like scenario when the market sold off amid the Great Financial Crisis.

Another user saw a "Black Swan" event — a phrase popularized by former options trader and risk analyst Nassim Nicholas Taleb, which refers to a rare event that can have potentially severe consequences.

The index futures have slumped in the aftermath of the reciprocal tariff announcement. 

In Asian trading, the Dow futures fell over 2%, and the S&P 500 and Nasdaq 100 futures plummeted over 3%.

The QQQ ETF ended Wednesday's session up 0.73% but fell 4.38% after-hours. 

Apple stock slumped 7.14% and Nvidia stock plunged by 5.70%.The Technology Select Sector SPDR Fund (XLK) dropped over 4%.

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