Trump’s Reckless Tariff Strategy: Markets in Meltdown

April 5, 2025

Inflatable orange balloon caricature of Donald Trump, symbolising market disruption and economic instability

By Samuel Mather-Holgate

The financial markets have had a rough ride recently, and if you’re watching the news or checking your portfolio, you’ve probably felt the impact.

One of the key drivers of this turbulence? The escalation of trade tariffs under former President Trump’s renewed economic influence, which is sending ripples—and in some cases, shockwaves—through global markets.

Let’s unpack what’s happening, why it matters, and what long-term investors should (and shouldn’t) do in response.

Trump’s Tariff Offensive: Economic Strategy or Political Sabotage?

Since returning to office, President Trump has wasted no time in reigniting a full-blown trade war. His administration has imposed a blanket 10% tariff on all imports and slapped 54% tariffs on Chinese goods, sending shockwaves through global markets.

These aren’t theoretical policies or campaign promises. They come into force on Wednesday—and the financial world is reacting in real time.

Let’s be absolutely clear: this is not strategic economic leadership—it’s politically driven protectionism, and it’s already beginning to damage the global economy.

Here’s how Trump’s tariffs are impacting markets today:

Consumer prices will rise- a lot!: Tariffs act as a tax on imports, which means businesses are paying more for goods—and passing those costs onto consumers. Inflation will tick up again, despite previous signs of easing.
Trade tensions are escalating: Major global partners, including the EU, are already threatening retaliatory tariffs. China have already retaliated That means more uncertainty for exporters and global supply chains.
Investor confidence is deteriorating: Tariffs create instability. Businesses are hesitant to invest, and markets don’t respond well to erratic policy shifts or economic nationalism.
Currency volatility is rising: As countries react to defend their economies, exchange rates are swinging, adding further unpredictability to global trade and investment flows.

This isn’t a new idea—Trump tried this approach before. And while it may grab headlines and stir up political support, history shows it’s economically self-defeating in the long run.

Why Are Markets Reacting So Sharply?

Markets like certainty. Investors value transparency, predictability, and policies that are sustainable—not reactionary.

Trump’s rhetoric introduces significant uncertainty. It calls into question global trade relationships, long-term corporate earnings, and international investment flows.

While this is playing out politically in the U.S., the effects are felt globally, especially in open economies like the UK that rely heavily on international trade and investment.

So, What Should You Do as an Investor?

It’s tempting to want to “do something” when markets get rocky. But the best investment decisions are rarely made in a panic.

Here’s what the data tells us:

1. Markets have seen worse—and recovered.

From the global financial crisis to Brexit, COVID-19, the war in Ukraine and inflation shocks, markets have always bounced back over time.
Investors who sold during the worst days often missed the best days that followed.

2. Missing just a few good days in the market can cost you thousands.

Trying to time the market is near-impossible. One study found that missing just the 10 best days in a 20-year investment period can reduce your returns by more than 40%.

3. Diversification works.

Being globally diversified means not all your eggs are in one basket. When one region struggles, others may hold up—or even benefit. A globally diversified portfolio helps manage risk when any one country (even the U.S.) is behaving erratically.

Our View: America’s Strategy Is Misguided, but Markets Are Bigger Than One Man

As financial advisers, we believe in calling things as we see them.

Trump’s economic strategy is flawed, short-termist, and ultimately damaging. While it may appeal politically, it lacks the foresight, fiscal responsibility, and global cooperation needed to lead the world’s largest economy effectively.

But as investors, we must remember this: the market is not one person.

It’s made up of companies, consumers, technologies, and human progress. And over the long term, it rewards resilience, innovation, and discipline—not political drama.