Tariffs: impact on markets

President Trump announced a swath of new tariffs in his “Liberation Day” address on 2 April. The UK will see 10% added to most goods that are imported by the USA. Other countries were hit with higher rates – 20% was imposed on the EU’s goods and 46% on Vietnam’s.

Equity markets weakened after the news but perhaps not as much as many had feared. Markets were mostly down in March (e.g. S&P 500 down 8%), reflecting worries about the upcoming tariffs. Safe havens have rallied a little at time of writing, with bonds and gold both up. Notably, however, the UK’s FTSE All-Share dropped just 2%, implying investor concerns over the impact on UK plc were relatively limited.

The tariffs are a significant headwind to global trade and will impact on economic growth if they remain in place – and if there is retaliation. Inflation will also likely be somewhat higher. Brunel, as a long-term investor, will continue to monitor developments and to prioritise our long-term fiduciary duty.