10 April 2025
If you are covering Donald Trump’s announcement that he is pausing reciprocal tariffs, and upping the rate for China, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“It appears Donald Trump cares about what markets think after all. After less than a week, he has rowed back on the reciprocal tariffs for countries, instead leaving the 10% universal tariff in place for all but China. China’s tariff rate has increased to 125%, although this won’t make much difference compared to the 104% it was at, but suggests the main aim of all of this exercise was to rebalance trade with China.
“Trump is gaining a reputation now for flip flopping on tariffs and not having a consistent economic policy. Even with this latest announcement, we still have the uncertainty from the fact this is just a 90 day pause. Government bond yields had been rising at a worrying rate and stock markets showed no sign of stabilising. Trump has likely stepped in before he would have had his hand forced by the Federal Reserve, a humiliation he clearly wants to avoid. Even so, the damage is arguably done for the US. Many consumers and businesses cannot plan with any sort of confidence just now and may see a recession hit regardless. Spending and investment could be pared back and would be completely counter to everything Trump said he wanted to achieve.
“What happens after this, or during for that matter, is anyone’s guess and as such investors shouldn’t get used to the sugar high markets have reacted with. These sorts of market issues require calm heads and cool hands, so for investors, patience is key. Drip feeding money into investments is the best way to ride out this period of volatility and ensuring your portfolio is in good shape once things settle down again.”
