Trump claims the tariffs will allow the US to economically flourish, saying they are necessary to address trading imbalances and protect American jobs and manufacturing.
From the baseline universal 10% tariff for the UK and some other countries to 20% for the EU and more than 30% on China and Taiwan, no countries were spared in what Trump dubbed ‘Liberation Day’.
The announcement sent shivers through global markets. S&P 500 futures dived 3.1% this morning, while Dow Jones Industrial Average future tumbled 2.5%. Contracts on the tech-heavy NASDAQ 100 led the sell-off, plummeting 3.5%.
Apple shares fell sharply, as did Nvidia and other chip stocks, amid concerns about disruption to their supply chains.
What do Trump’s new tariffs mean for investors?
The tariffs have spread fresh worries about the implications for the global economy. It’s currently unclear to what extent other countries might retaliate with tariffs and how the trade war could still escalate.
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The UK might appear to have been dealt a better hand compared to some nations, but a drag on growth looks inevitable due to the impact on the global economy.
UK Prime Minister Keir Starmer is hoping for a trade deal, which could help alleviate more of the tariff burden, but the outcome is uncertain.
Daniel Morris, chief market strategist at BNPPAM, said: “The tariff announcement was worse than most investors expected. The key question now will be whether there is scope for negotiation on the reciprocal tariffs.
“The tariffs will lead to a largely one-off adjustment in equity prices as the impact on input costs and sales prices is accounted for. At the same time, US domestic producers will benefit from displaced demand, and the increase in US Government revenue should benefit US Treasuries, leading to lower financing costs for companies.”
‘Shiver through global markets’
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “A brutal round of trade top Trumps is sending a shiver through global markets. As threats have turned into facts, the plan for blanket tariffs on US trading partners has unnerved investors.
“As Trump has ripped up trade norms, it’s spread fresh worries about the implication for the global economy. Futures trades indicate a sharp fall for the S&P 500, with other indices around the world looking set to follow suit.
“It’s important that during times of volatility, eyes are kept on long-term investment horizons. Investors should ensure they are well-diversified, without too much concentration on a particular market, and with money spread across different asset classes and geographies.”
Streeter added: “Time in the market and diversification have consistently been the foundations of successful investing strategies. For investors owning quality companies over the long term, big bumps in the road are part of the journey.
“The strategy of drip-feeding investments by gradually allocating funds can also help mitigate risks and can pay off in uncertain times. It means investors may be able to take advantage of lower prices and benefit during a recovery, to help smooth out sharp market movements over the longer term.”
