Markets enter the week on edge after a punishing stretch of tariff-driven volatility. With the first wave of U.S. tariffs taking effect Friday and more slated for April 9, investors will be watching closely for updates on global retaliation, political developments, and early signals from the corporate earnings season.

"Tariffs pose a headwind to Canadian and U.S. economic growth and put upward pressure on prices in the near term. However, the Canadian and U.S. economies entered 2025 with strong momentum," Brock Weimer, associate analyst at Edward Jones, wrote in a weekly blog post.

U.S. inflation data and a fresh deadline on the TikTok deal round out a packed week that could further increase market volatility.

1. Trade tensions escalate with tariffs set to take effect

The U.S. market selloff deepened last week as China retaliated against President Donald Trump’s sweeping 10% import taxes, fueling fears of a prolonged trade war.

The S&P 500 dropped more than 10%, marking its worst weekly loss since 2020, while global markets also posted heavy declines.

Trump’s tariffs—set to expand further on April 9—are expected to lead to a contraction in global trade, with some analysts warning of recession risks. Meanwhile, the European Union is weighing its response.

EU officials said Friday that negotiations with the U.S. were “frank,” but warned the bloc is “prepared to defend our interests” if needed.

Markets will be watching for any signs of de-escalation—or escalation—in the days ahead.

2. Trump’s social media posts continue to fuel uncertainty

President Trump continued to defend his tariff strategy over the weekend, signaling on Truth Social that he was unfazed by the market turmoil.

He claimed foreign investors were flocking to the U.S. and insisted his policies “will never change.”

While he suggested on Thursday that some countries were seeking deals ahead of Friday’s tariff deadline, Trump took a harder line on Friday morning, attacking China’s retaliatory measures.

He accused Beijing of “panicking” and reiterated his goal of stopping fentanyl shipments from China. Given last week’s developments, traders will closely monitor Trump’s feed for further updates, especially as the EU mulls its next move.

3. Earnings season kicks off with big banks

The unofficial start to earnings season arrives Friday, with reports due from BlackRock Inc (NYSE:BLK), JPMorgan Chase & Co (NYSE:JPM), Morgan Stanley (NYSE:MS), and Wells Fargo & Company (NYSE:WFC).

Retailers and airlines also report earlier in the week. Levi Strauss & Co Class A (NYSE:LEVI) posts results Monday, followed by Walgreens Boots Alliance Inc (NASDAQ:WBA) and Cal-Maine Foods Inc (NASDAQ:CALM) on Tuesday.

Delta Air Lines Inc (NYSE:DAL) reports Wednesday, providing a key look at the travel industry amid rising costs and geopolitical stress.

Still, with markets focused on Trump’s next move, positive earnings surprises may not be enough to shift sentiment if trade tensions continue to mount. Analysts warn that rising economic uncertainty from the trade dispute could weigh on investor sentiment.

4. March CPI in focus amid tariff-driven inflation fears

Thursday’s CPI report will offer a timely read on U.S. inflation as tariffs begin to ripple through supply chains.

Economists at Barclays expect the March print to be “benign and relatively unaffected by tariffs,” but warn that inflation could rise sharply later in the year due to the April 2 “Liberation Day” tariffs.

“If in line with our forecast, this could be one of the softest inflation prints we receive this year,” the bank said.

The report could influence expectations for a Fed rate cut in May, though stickier inflation driven by protectionist policy may complicate the central bank’s path.

5. TikTok Deal Deadline Extended

Trump extended the deadline for ByteDance to sell TikTok’s U.S. operations by 75 days, pushing the new cutoff into mid-June. The president said more time was needed to finalize approvals but stressed that national security concerns remain unresolved.

ByteDance confirmed ongoing talks with the U.S. government, while Amazon.com Inc (NASDAQ:AMZN), Oracle Corporation (NYSE:ORCL), and Applovin Corp (NASDAQ:APP) have all expressed interest in acquiring the app’s U.S. assets.

Trump’s latest comments also tied the deal to broader trade tensions with China, saying he hoped to continue negotiations “in Good Faith.”

Any updates on this front could add another layer of volatility to a market already rattled by geopolitical uncertainty.