06:33 AM EDT, 04/02/2025 (MT Newswires) -- President Donald Trump's so-called "Liberation Day" has arrived and an announcement is scheduled for the Rose Garden at 4 p.m. ET Wednesday when all will be revealed in terms of the tariff actions against the United States' trading partners, said MUFG.

President Trump stated on Sunday that the plan will cover "essentially all" countries, but then on Monday stated that the plan would be "very nice, relatively speaking" and again emphasised the word "reciprocal" as "very important, what they do to us we do to them." But that is a very difficult measure to benchmark in reality, with the U.S. free to do what it wants, wrote the bank in a note to clients.

The Office of the US Trade Representative (USTR) on Monday released its annual National Trade Estimate Report, which highlights country-by-country trade barriers among 40 U.S. trading partners. As an indication of how broad trade barriers can be, the report highlights 14 different metrics that determine the extent of trade barriers for U.S. exports into international markets, ranging from subsidies to tech-sector barriers to government procurement policies to labor and environment laws.

These metrics will likely be cited Wednesday by President Trump as factors that were taken into account when setting country tariffs. According to White House Press Secretary Karoline Leavitt, sector-specific tariffs won't be the focus of Wednesday's announcements with broad country-level tariffs the main tariff plan.

If that's the case, the countries given greatest focus in the USTR's National Trade Estimate Report could very well be the countries that are hit most aggressively with tariffs -- likely to be around the 20% to 25% level, stated MUFG.

The bank sees some key aspects that will determine whether the financial markets interpret the announcements as aggressive or not. A wide blanket tariff globally capturing all the major trading partners with a 20%-25% tariff would be seen as the most aggressive and likely to illicit the biggest risk-off reaction.

However, there has been speculation that discussions on trade deals could exclude certain countries -- for example, the United Kingdom -- and the more examples of that the better, the markets can take the announcements. Also, does China escape the scale of action compared with others, given that two 10% tariffs have already been announced? Trump may go with a smaller 10% tariff on most countries, which would also be taken better by the markets and would help reduce risk aversion, pointed out the bank.

Finally, does Canada and Mexico escape the same scale of action given they are in the USMCA? Again, that would be good news for investors, it added.

All told, MUFG believes the financial markets are under-estimating the scale of action. Global rates are falling but the Canadian dollar (CAD or loonie), Australian dollar (AUD), Norway's krone (NOK) and Sweden's krona (SEK) outperformed on Tuesday, hardly signs of tariff concerns and rising risks of global trade disruptions, noted the bank.

Markets may well be set for some reversal of these currencies outperforming if the U.S. delivers a more aggressive plan of tariff action than the markets seem to be fearing, according to MUFG.