3 April 2025
If you are covering the announcement of new tariffs, including a universal baseline of 10%, from President Trump, please find below a comment from Lindsay James, investment strategist at Quilter:
“Donald Trump wants the richest economy in the world to be even wealthier, and tariffs are going to be his primary way of achieving this. A universal baseline tariff of 10% will apply from tomorrow, with certain industries and countries targeted with even higher rates. The President said his administration is being ‘kind’ by providing discounts on what they believe the effective tariff rate is on US products. Perhaps this is a sign that Trump still cares about what the market thinks, but a more cynical view may suggest he could come back for more and raise tariffs further, particularly if countries retaliate following this announcement.
“For the UK, facing a 10% tariff, it has perhaps got off more lightly compared to other countries and the European Union. But this is still significant and will hit industries hard, particularly given the likes of car manufacturers face an even harsher rate. Whether or not this latest round of tariffs is additional to those already announced remains uncertain, as does the extent of any opportunity to negotiate.
“Trump has made it clear that this is the end of the established economic order, and he wants America calling the shots. These tariffs are stark and perhaps more aggressive than many in the market had been expecting. Indeed, Trump scheduled this press conference for after the stock market closes for good reason, with the US futures market falling sharply as a result of this speech.
“Ultimately, Trump is playing a high risk game. He is risking stoking a fresh inflationary spiral in the hope that over time jobs and industry are restored to the US. This is following an election campaign where he promised to lower inflation and bring interest rates down. But, tariffs have rarely ended in positive outcomes, and signs are already pointing to weakening consumer and business sentiment and the risk of a slowing US economy.
“Trump continues to tout tax cuts, but there remains very little detail on what this means or when they will come about. Markets will be wanting more detail on both this and further deregulation, and given the scale of these tariffs that may need to come sooner rather than later for US equities. For businesses it remains a very volatile and uncertain economic period, and this will be reflected by markets for the time being. Investors will need be patient and calm, staying invested for the long-term.”
