The recent week of turmoil on global stock markets came to an unexpected halt when US President Donald Trump softened his stance on tariffs. Trump’s aggressive tariffs had caused trillions of dollars in market value to be lost, leading to the sharpest declines in years. Specifically targeting countries with high trade surpluses, Trump imposed tariffs of up to 125 per cent on China, with a 10 per cent levy on other nations for the next 90 days.

The markets reacted positively to Trump’s decision to ease the tariffs, with a strong rebound observed. The initial fear of a global recession and supply chain disruptions caused by the tariffs had sent major indices tumbling by more than 10 per cent. Economists had to revise their growth predictions, with Capital Economics lowering its end-of-year forecast for the S&P 500.

China, a primary target of Trump’s trade policies, responded by imposing tariffs on US exports. The threat of dumped Chinese exports on other markets became a concern for many nations. Despite the initial resistance from Trump, the potential damage to the economy and investment portfolios forced him to reconsider his approach.

The UK, with a trade deficit with the US, initially faced a lower tariff compared to the EU. However, this advantage was short-lived as the tariffs were equalized. The upheaval in the markets provided an opportunity for investors to acquire shares at discounted prices, particularly in the UK and EU markets.

The lesson learned from the market turmoil emphasized the importance of well-diversified portfolios and strategic investment decisions. Selling during times of uncertainty can lead to losses and missed opportunities for gains during market rebounds. Smart investors utilized the market downturn to identify quality bargains and companies with strong exposure to domestic economies.

Looking ahead, investors are advised to stay informed and adapt their strategies accordingly. The impact of tariffs on investor portfolios will continue to be a key consideration in the coming weeks. Stay tuned for our upcoming Big Read, where we will delve deeper into the implications of tariffs on trading nations and investors’ portfolios.