Market Volatility & Trump’s Tariffs: What Investors Need to Know

By Samuel Mather-Holgate

Understanding the Recent Market Turbulence

Global financial markets have faced increased volatility following the announcement of new U.S. tariffs. The United States has imposed:

• A 20% tariff on goods from China
• A 25% tariff on goods from Mexico and Canada

These measures have caused immediate market reactions, including:
Weaker equities and currency fluctuations – The U.S. dollar has dropped, and stock markets have experienced heightened volatility.
Unchanged fixed income markets – Bonds have remained relatively stable, reflecting a more measured investor response.

While these headlines are eye-catching, it’s important to remember that markets often overreact to uncertainty before settling.

Why These Tariffs Might Be Temporary

Historically, tariffs have been used as a negotiation tool, rather than a permanent policy shift. For example, previous trade disputes between Colombia and the U.S. resulted in similar measures that were later reversed.

Additionally, countries impacted by tariffs often find alternative export routes. In the case of China, Vietnam and other Southeast Asian nations have been used as intermediaries to reduce direct tariff exposure.

What This Means for Your Investments

1. Maintaining Diversification is Key
During times of uncertainty, maintaining a well-diversified portfolio helps reduce risk. Spreading investments across multiple asset classes, sectors, and geographies allows investors to navigate volatility more effectively.

For instance, within fixed income, holding index-linked bonds acts as a hedge against rising inflation, which could result from ongoing U.S. policies.

2. Defensive Equity Positioning
With U.S. equity valuations currently much higher than at the start of Trump’s previous presidency, there is an increased risk of market corrections. Many of our investment partners are maintaining a defensive approach, favouring less cyclical, more stable sectors that can weather potential downturns.

It’s worth noting that despite current volatility, 2025 has started strongly in terms of portfolio returns, demonstrating the resilience of well-structured investments.

3. The UK’s Position & Market Resilience
Unlike some European economies, the UK’s trade relationship with the U.S. is relatively balanced, which may insulate it from the worst effects of the new tariffs. This is reflected in the resilience of sterling, which has held up well compared to other currencies.

While these policies may have indirect consequences, we continue to monitor developments closely, ensuring that our clients’ portfolios remain well-positioned for any shifts in the market landscape.

Our Investment Approach: Staying the Course

1. Long-Term Investing Beats Market Timing

It’s natural to feel uncertain when markets become turbulent, but history has shown that long-term investors benefit from staying invested rather than reacting emotionally.

Even during periods of heightened volatility, markets tend to recover and grow over time. Short-term downturns often present buying opportunities rather than reasons to panic.

2. Diversification Protects Against Risk

By ensuring exposure to a mix of equities, fixed income, and alternative investments, portfolios can be better equipped to withstand global economic shifts.

3. Keeping an Eye on Valuations

Given the current market environment, we continue to monitor valuations to ensure that portfolios remain aligned with long-term investment goals.

4. Avoiding Knee-Jerk Reactions

The reality is that market swings are inevitable, especially when political events drive short-term uncertainty. By maintaining a disciplined, valuation-driven approach, investors can avoid unnecessary losses from emotional decision-making.

Final Thoughts & Next Steps

We understand that geopolitical uncertainty can feel unsettling, but history shows that staying invested and focusing on the long term is the most effective strategy.

We are actively monitoring the situation and engaging with industry experts to assess potential impacts.
We will continue providing updates as new information unfolds.
If you have any questions or concerns, please get in touch.

Your financial security remains our top priority, and we are here to guide you through any uncertainty.

If you’d like to discuss your investment strategy in more detail, BOOK A CALL BACK today.