The "4.2" tariff landing transaction manual, after reviewing the analysis of several major banks on tomorrow's tariff landing, is worth carefully reading and has significant reference value. 1. Morgan Stanley's latest analysis: 1) This tariff is more like the White House's "sky high demand", and there is still room for improvement in the future; 2) Several scripts from baseline to extreme Baseline: An additional 10% tariff will be imposed on Dongda, with Europe mainly targeting individual products. Canada and Mexico may continue to be "exempt", and then impose small tariffs on multiple Asian countries. The benchmark situation has been reflected in market expectations. If it is more moderate: it is possible that Dongda will no longer impose additional tariffs, the EU will also collect less, Mexico and Canada will continue to be exempted, S&P will rebound to 5800-5900, and if profit expectations improve, the most optimistic scenario is to return to February's 6100. If it is more severe: adding more than 10% directly to China, it will also affect various industries in the European Union, the exemption for Mexico and Canada has been withdrawn, and many Asian countries have been affected, then the S&P 5500 is the starting price. 2. Goldman Sachs' tariff report focuses more on the chain reaction of GDP/CPI/monetary policy: 1) Provide a clear benchmark forecast of "average tariff increase of 15%" (the second increase within a month), exceeding the market's general expectation of 9%, emphasizing the significant impact it will ultimately have on the US economy. 2) We have explicitly lowered the Q4 2025 GDP growth rate to 1.0% and stated that the probability of recession has increased from 20% to 35%. Based on this, companies and investors need to defend against the more severe scenario of "soaring core inflation, slowing GDP, and rising unemployment rate". 3) Advance the forecast of the only interest rate cut in 2026 to 2025, with an expectation of three interest rate cuts throughout the year (July, September, and November) to address the economic downturn risk caused by tariffs 3. Analysis by JPMorgan Chase 1) Differentiated treatment in different countries and regions Canada/Mexico: JPMorgan expects these two countries not to be included in a new round of tariff announcements, maintaining the previously delayed 25% tariff. EU: Despite Trump's previous mention of a 25% tariff, Bloomberg reports that the EU plans to make concessions that could lead to tariff rates dropping to the range of 10% -15%. Japan: Given its willingness to negotiate and commitment to increasing investment in the United States, Japan may receive lower tariff rates, even lower than the European Union, at around 10%. 2) Two possible outcomes of tariff policy Ideal scenario: A unified tariff of 10% or less, excluding value-added tax, while willing to discuss industry tariffs (25% for aluminum/steel, 25% for automobiles, 200% for EU champagne/wine, and potential 25% for chips and pharmaceuticals). Avoiding tariffs on ships will be a positive signal. Negative situation: higher than expected unified tariffs, including value-added tax, plus additional industry tariffs. Any sales ban or fines/tariffs imposed on ships will have a serious negative impact. 3) JPMorgan assumed market reactions under different tariffs in its report: 10% tariff: Assuming a 10% comprehensive tariff, cancel/replace Canada/Mexico tariffs: S&P 500 index rises by 2-2.5%, 10-year yield increases by about 10 basis points, euro/dollar drops to 1.06-1.07 25% tariff: The S&P 500 index fell by 1.25% -1.75%, the 10-year yield fell by 12-14 basis points, and the euro/dollar fell to 1.03-1.05. 35% tariff: The S&P 500 index fell by 2% -3%, the 10-year yield dropped by 20 basis points, and the euro/dollar fell to 1.01-1.03. 4. How to observe the tariff results on April 2nd for CICC Overseas one ⃣ ） Current tax rate? The tariffs that have come into effect since Trump took office include: a 10% tariff on China in February, a 10% tariff on China in March, and a 25% tariff on steel and aluminum in March (the 25% tariff on automobiles will take effect on April 3). Therefore, the effective tariff rate has increased from 2.2% to the current 5.1%. two ⃣ ） How could it be added on April 2nd? (1) The automobile tariffs will take effect as scheduled, with an effective tax rate increase of 2.3 ppt; (2) If other countries only have equivalent tariffs, the effective tax rate will increase by 0.4 ppt; (3) The Mexican tariffs have come into effect, with an effective tax rate increase of 3.6 ppt; (4) Equivalent tariffs and value-added tax, with an effective tax rate increase of 4.3 ppt; (5) Specific industries such as timber and pharmaceuticals have implemented tariffs, with an effective tax rate increase of 1.8 ppt. three ⃣ How will the market react? (1) Under mild circumstances, if automobile tariffs take effect and the United States only applies equivalent tariffs, the effective tariff rate will increase to 7-8%. If Mexico Canada tariffs also take effect, the tariff rate will increase to 11-12%. This situation should meet expectations and have limited impact on the market; (2) In extreme cases, the United States may face significant market pressure based on tariff+value-added tax equivalence, with specific industry tariffs in effect and effective tariff rates approaching 17-18%. In my personal opinion, each party has divided tariffs into multiple scenarios, with the core still being the mild and strongest versions discussed earlier. In other situations, there is a swing between these two versions. What needs to be considered for market performance is: 1) If it's the toughest version, will the days after the 2nd be the peak of uncertainty for a period of time in the future? Because the strongest hard version is bound to trigger the most pessimistic expectations in the market It can also cause a huge impact. Afterwards, each country will engage in a game with the United States, as the worst-case scenario has already emerged. Any positive developments in the game will boost market confidence. 2) If it is a mild version, the market should be good on that day, and confidence will naturally rise instead of what everyone thinks. But the game afterwards will definitely be back and forth, so after the market surges on the 2nd and 3rd, it will start and stop again, advance three times, retreat one or retreat two, and the repeated grinding time will also be very long. Witness this critical moment together 🧐