The market impact of tariffs
Trump administration tariff measures
The latest wave of tariff measures from the Trump administration has sent shockwaves through financial markets, setting the stage for heightened uncertainty and potential realignment in global trade dynamics.
While the White House presents these tariffs as a necessary defence against unfair trade practices, the reality is far more complex. The measures announced on ‘Liberation Day’ were at the higher end of expectations, targeting not only trade surplus nations but even countries running deficits with the US.
Equity markets responded dramatically, with US stocks initially underperforming relative to their European counterparts, illustrating the costs associated with protectionism. Major corporations that rely on global supply chains, such as Apple and Nike, find themselves in a precarious position. The prospect of onshoring these operations hinges on American workers’ willingness to take on roles traditionally outsourced due to cost efficiencies — a reality that does not align with current labour market conditions.
In this climate of uncertainty, it is important to remember that market volatility is a feature of investing.
The table linked below shows how global equities fall on average by over 14% every year (the orange dots). However, 74% of the time markets bounced back to finish the year in positive territory (the blue lines), illustrating that declines are temporary, and investors should focus on the long-term benefits of remaining invested.
No one can project when the markets will return to growth after these tariff measures. However, our investment philosophy is founded on the principle that time in the market is the safest approach to delivering long-term value.
The current suppressed valuations may present an excellent buying opportunity for longer-term investors, with the risk appetite to withstand the uncertainties over the coming months and could be especially timely for those looking to top up ISA and pension accounts at the start of the tax year.
How we can help
Our financial planning team is here to help you create a robust long-term investment strategy and identify the actions needed to achieve your future goals. We can assess your risk exposure considering recent changes and guide you in making informed decisions to strengthen your comprehensive financial plan.
