Tariffs return: what they mean for investors
New US tariffs have unsettled markets and raised concerns about global growth. While short-term volatility is likely, staying focused on your long-term investment goals remains key.
What’s happened?
US President Donald Trump has announced sweeping new tariffs on imports. A baseline 10% tariff on all goods will take effect from 5 April, with significantly higher ‘reciprocal’ tariffs following on 9 April. These include a 34% tariff on goods from China, 20% on the EU and 24% on Japan. Markets have reacted sharply. Asian markets fell overnight, and European and US markets have followed suit. Investors are concerned about higher inflation, weaker consumer spending and a broader slowdown in global trade.
There’s also uncertainty about how other countries will respond – particularly whether they retaliate or pursue trade negotiations. In short, tariffs are going up, inflation risks are rising and global trade may slow – but there’s still a wide range of possible outcomes depending on how countries respond.
A view from Andrew Summers, Omnis Chief Investment Officer
Markets were braced for some form of tariff announcement, but the detail and severity were more than expected. Our base case is that these measures will modestly reduce global growth and slightly increase inflation. Central banks are more likely to support growth than fight inflation at this stage, and market pricing is reflecting that. There are a number of risks on both sides. A full-scale trade war would be a clear negative for risk assets, such as equities, and could delay or reverse expected rate cuts. But it’s also possible this becomes a market-clearing moment – where uncertainty begins to fade, tax cuts or stimulus follow, and markets recover.
At Omnis, we’re maintaining a slightly defensive stance, with a modest preference for government bonds over equities. We’re monitoring developments closely and remain ready to adjust as the picture evolves.
