What has happened?
On 2 April 2025, US President Donald Trump announced new taxes on goods imported into America. These taxes, known as tariffs, have important effects on various industries and the global economy.
The new tariffs include:
- A 10% tax on all imports into the US
- Higher taxes for certain regions, like 20% for the EU and 54% for China
- A 25% tax on car imports
What does this mean for investors?
When tariffs are announced, markets often become more volatile, which means they can change quickly. This is because investors are trying to figure out how the tariffs will affect companies' profits and the overall economy.
- Short-term impacts - industries directly affected by the tariffs, especially car manufacturers and pharmaceutical companies, will see the most immediate changes. UK companies that sell products to the US will be particularly impacted.
- Long-term impacts - higher costs for businesses can reduce their profits or make them raise prices, which can lower consumer demand. Economic uncertainty can also delay investments in new projects, slowing down economic growth.
Although tariffs pose challenges, history shows that well-diversified investments with appropriate risk management can handle these changes. It is important for you to stay calm and focus on your long-term investment goals. Investing with a long-term outlook is the best way for you to reduce the impact of stock market fluctuations and to grow your investments over time.
