Market Update

On April 2, 2025, President Donald Trump unveiled a significant change in U.S. trade policy, announcing a 10% baseline tariff on all imports. The European Union faces an additional 10%, while the UK is exempt from further charges. China, Vietnam, and Thailand are subject to steeper rates of 54%, 46%, and 36%, respectively. A separate 25% tariff will also apply to all foreign-manufactured automobiles.
While these new measures have stirred concern, it's important to keep perspective. Sectors such as automotive and pharmaceuticals may face short-term headwinds, but others—such as utilities—are likely to remain relatively unaffected. These tariffs could represent the starting point for broader negotiations and may ultimately be revised or reversed, as seen during Trump’s first term, potentially lessening their long-term impact on markets.
This moment draws clear parallels to the early days of Trump’s presidency in 2017. Back then, markets initially surged on the promise of tax cuts and deregulation, only to falter as trade tensions took center stage—causing equity markets to retreat and the U.S. dollar to weaken.
With midterm elections looming in November 2026, Trump appears eager to implement these measures early, seeking to rally support and avoid repeating past missteps, such as the loss of the House in his previous term. If negotiations proceed positively, markets may recover, creating a more favorable economic backdrop ahead of the elections.
Amid this evolving landscape, the long-term view remains essential. Investors who stay the course are better positioned to benefit as equity markets move beyond short-term volatility and resume their upward trajectory.
Although U.S. tariffs may disrupt global markets, their impact on Asia—particularly China and India—may be less severe than some anticipate.
China, the world’s second-largest economy, maintains strong trade ties with the U.S., particularly in manufacturing and technology. However, U.S. trade constitutes only a small portion of China’s GDP. While specific industries such as technology and agriculture may feel the pinch, China’s ongoing shift toward a consumer-driven economy—underpinned by a growing middle class—offers a cushion. Domestic sectors like healthcare, retail, and services remain robust, and China may further strengthen its trade relationships with regions such as the EU and India.
Similarly, India’s economy—though closely linked with the U.S. in areas like IT, textiles, and pharmaceuticals—is not overly dependent on exports. Domestic demand continues to play a central role, helping shield key sectors like consumer goods, banking, and infrastructure from the brunt of trade tensions.
UK investors are likely to remain largely insulated from tariff-related volatility. The UK's market composition—particularly its emphasis on domestic services and multinational companies—helps protect it from external trade shocks.
European markets are currently preoccupied with tariff developments, which have overshadowed deeper economic concerns. Weak data, sector-specific struggles, and political uncertainty continue to weigh on sentiment. Despite a recent rally, valuations remain suppressed and in need of a catalyst to regain momentum.
Japan’s automotive industry is particularly exposed. Any escalation in tariffs could significantly affect manufacturers. In addition, a stronger yen—amplified by higher global interest rates—may add pressure to Japanese exporters, compounding the economic challenges over the medium term.
Despite the initial shock, it's likely that the worst of the tariff news is already priced in. Trump’s decision to announce all changes at once gives markets an opportunity to digest the implications, potentially paving the way for relief rallies as negotiations unfold. While some short-term volatility is still expected, current dynamics suggest we are entering a phase of stabilization and potential growth.
Our team continues to monitor developments closely and will adapt our strategy as needed—always with your long-term goals in mind. In uncertain times, staying invested and committed to a diversified, long-term strategy is key. Discretionary-managed portfolios are designed to weather volatility through global diversification across sectors, regions, and asset classes.
Avoiding reactive decisions during short-term market dips helps prevent locking in losses and missing recoveries. History has shown that successful investing is not about timing the market—but about time in the market. From the global financial crisis to the COVID-19 sell-off, market volatility has often set the stage for long-term opportunities.
With Trump’s push for trade deals and market-friendly policies ahead of the midterms, we remain confident in the resilience of markets. Staying focused on fundamentals and long-term positioning will continue to serve investors well.