What has happened?
On 2 April 2025, US President Donald Trump announced a new set of tariffs with fresh import taxes on goods coming into America. This move has significant implications for various industries and the global economy.
What does this mean for investors?
Markets often experience heightened volatility when tariffs are announced due to the uncertainty about future corporate earnings and economic conditions.
- Short-term impacts - industries directly affected by the tariffs, especially in the automotive and pharmaceutical sectors, will see the most immediate volatility. UK companies exporting to the US will be particularly impacted.
- Long-term impacts - higher business costs can reduce profit margins or force price increases, lowering consumer demand. Economic uncertainty can also delay capital investments, slowing economic growth.
What happens next?
While tariffs pose challenges, historical evidence shows that well-diversified portfolios with appropriate risk management can weather the storm. Investing with a long-term outlook is the best way for your clients to reduce the impact of stock market fluctuations and to grow their investments over time.
