The impact of US tariffs on global markets

9 April 2025

Wesley Coultas

Global markets have experienced renewed volatility following a dramatic shift in US trade policy, with significant implications for investors around the world.

Last week, President Trump announced a wide-ranging package of new import tariffs, including a 10% baseline levy on all goods entering the US, due to take effect from 5 April. In addition to this sweeping measure, certain economies identified as ‘worst offenders’ - including the European Union (20%), China (34%), and Japan (24%) - will face even steeper tariffs from 9 April. The automotive industry, in particular, has been targeted, with a 25% tariff now in place on all foreign-manufactured vehicles. While select sectors such as copper, pharmaceuticals, semiconductors and lumber have been temporarily exempted, they remain under review for potential future action.

Naturally, markets have reacted. Equities with heavy exposure to international supply chains - especially in the industrial and automotive sectors - have come under pressure, particularly in Europe and Asia. There is also growing speculation about retaliatory actions, with China already responding with reciprocal tariffs, and the EU indicating it may follow suit. This has added further layers of uncertainty to the global outlook.

For the UK, the picture is slightly more nuanced. While the economy is currently subject only to the 10% baseline tariff, British firms with international operations or overseas suppliers may still experience indirect effects. Currency markets have also responded sharply, with the US dollar strengthening and emerging market currencies under pressure - both signs of investor concern around the shifting trade landscape.

While such headlines can cause understandable anxiety, it’s worth remembering that short-term market movements don’t necessarily alter long-term investment fundamentals. The situation remains fluid, with President Trump suggesting a willingness to negotiate, which may lead to further developments over the coming weeks.

Looking ahead, global inflation expectations have risen, economic growth forecasts have been trimmed, and central banks may respond with accelerated monetary easing. Although these dynamics present challenges, they can also create opportunities - particularly for investors with diversified, flexible portfolios.

At Walker Crips, we believe this environment highlights the value of active investment management. Our focus remains on building high-quality, resilient portfolios that are capable of withstanding market turbulence and continuing to deliver long-term value.

We will continue to monitor developments closely and share our insights as the situation evolves.

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