What Trump’s proposed sweeping tariffs could mean for your investments

05/06/2025

News regarding Trump's tariffs has resulted in rising market volatility. While they are currently on hold, here's what this could mean for your investments

If you’ve been following the news lately, there’s a good chance you may have found it challenging to keep up, especially regarding global trade.

On 2 April 2025, the newly elected US president, Donald Trump, announced sweeping tariffs on imported goods from countries around the world, an event he named “Liberation Day”.

The announcement was significant, resulting in considerable market volatility across the globe.

Within days, those decisions were seemingly reversed or softened as Trump introduced pauses, launched trade negotiations, and reassured some allies.

If you’ve felt a sort of “financial whiplash” from this, then you’re definitely not alone. With so much noise in the headlines, it can be easy to feel uncertain about your investments.

But while markets might react suddenly to political events, your long-term plan shouldn’t.

Continue reading to discover exactly what happened, what this could mean for your portfolio, and why it’s vital to remain calm and stay on course.

Trump’s proposed tariffs resulted in immediate market volatility

In an attempt to draw production back to the US and make American companies more competitive, Trump introduced a baseline tariff of 10% on all imported goods, with higher rates for specific nations.

China, in particular, was hit the hardest, and after several rounds of retaliatory measures, it faced a 145% charge on any goods entering the US.

Financial markets responded immediately. On 3 April, just one day after “Liberation Day”, the BBC reveals that the:

  • S&P 500 fell by 4.8%, losing roughly $2 trillion in value
  • Dow Jones closed around 4% lower
  • Nasdaq fell by 6%
  • FTSE 100 fell by 1.5%.

Perhaps due to pressure regarding market volatility, Trump then announced a 90-day pause on many new tariffs on 9 April 2025. It’s worth noting that the 10% blanket rate remained in place, as did China’s 145% rate.

Again, markets were quick to respond, with the S&P 500 rising by 7%, and the Nasdaq jumping by more than 9%, Reuters reveals.

Since then, efforts have been made to ease trade tensions. On 11 May, Reuters confirmed that the US and China had begun discussions to de-escalate a potential trade war.

Moreover, the US and UK managed to strike a trade deal, offering the UK limited relief from US tariffs on car and steel exports so long as it complies with strict American security requirements.

While market volatility is concerning, it’s an inherent part of investing

Even if none of these tariffs are fully implemented, their announcement alone has already resulted in significant volatility. You’ve likely seen this in your portfolio.

This is a reminder of how sensitive markets can be to global events, especially when they involve major powers.

While these movements can be unsettling, it’s vital to remember that volatility is an inherent part of investing.

Over the past four decades, markets have faced several significant challenges, such as the:

  • Dot-com crash
  • 2008 financial crisis
  • Covid-19 pandemic.

Despite each of these periods of considerable downturn, markets have generally trended upward over time.

Take this graph, for instance, which shows the performance of the FTSE 100 index between April 1985 and April 2025:

Source: Google Finance

Despite sharp dips occasionally, the index has continually recovered. Granted, this did take time, but remaining invested could allow your portfolio to benefit from an eventual rebound.

Temporary setbacks – often described as “market corrections” – are also more common than you might think.

According to data from Fidelity, the S&P 500 has experienced a correction of at least 10% in 47% of calendar years since 1980.

These events are part of the natural cycle of markets and are almost inevitable. Still, with patience, you can give your portfolio the opportunity to recover and continue growing over the long term.

Research from Visual Capitalist even shows that, over the last 20 years, 7 of the 10 best trading days for the S&P 500 have occurred during bear markets, when stock values are falling.

If you sell your investments during a downturn with the hopes of cutting your losses, you might miss out on one of these days of recovery, ultimately harming the long-term performance of your portfolio.

“Market noise” could affect your decision-making abilities

Aside from the financial consequences, constant news regarding tariffs could also affect your portfolio unexpectedly.

Indeed, when you’re constantly bombarded by headlines, this could affect your decision-making.

You may check your portfolio more frequently, worry about short-term performance, or make hasty decisions that don’t align with your long-term plan.

This is often referred to as “market noise”, and it’s not unusual to feel the urge to react when markets are volatile.

To help maintain perspective, it might be worth taking time to assess the information you’re consuming.

Think whether it’s based on facts or speculation, and whether it’s helping you to make informed decisions or simply increasing your anxiety.

If you find it especially challenging to filter out the noise, limiting your exposure to financial news during particularly turbulent times may be prudent.

This could help you stay focused on your long-term goals, rather than being swayed by short-term distractions.

A financial planner could help you stay focused on your long-term goals

Of course, staying calm and focused during periods of uncertainty is often easier said than done.

Trump’s presidency has only just begun, and his actions have already had a considerable effect on markets around the world.

With at least four more years of potential policy changes ahead, you may understandably feel concerned about what the future might hold for your investments. Even other global factors – such as geopolitical tension or sticky inflation – could affect this.

This is where working with a financial planner can make a real difference.

We could help you navigate any short-term volatility without losing sight of the bigger picture. We will take time to understand your goals, review your risk tolerance, and ensure any investment strategies you employ remain appropriate for your unique circumstances.

We can also offer reassurance and clarity during periods of uncertainty regarding unpredictable headlines, allowing you to remain calm and collected.

Get in touch

Regardless of what Trump’s tariffs might bring, we can help you remain focused on the horizon.

If you or your loved ones would like professional financial support, email info@douglaswhiteltd.com or call 0151 345 6828 to find out more.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.