- US tariffs move to levels not seen in over 100 years
- UK gets dealt a better hand, but stocks still drop
- Gold sees fresh demand as investors take risk off the table
- Oil prices fall on global growth concerns
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Trump’s bold attempt to reshape international trade has sent shockwaves through global markets. The effects of ‘Liberation Day’ are being felt far and wide, with Asian markets down overnight, European stocks under pressure in early trading, and US futures pointing to a big drop later today. With tariffs reaching levels unseen in over a century, the US is poised to rake in an additional $600bn in tariff revenue in an optimistic scenario, or put that another way, that’d be a $600bn added cost for businesses or consumers to stomach.
While economists scramble to predict the impact on inflation and global growth, businesses around the world are getting their first real look at what a tariff-heavy US trade policy means, and this may just be the beginning of a fresh round of tariff drama. Each country now faces the option of negotiating from this starting point, which, in theory, represents the worst-case scenario. A carrot has been dangled, but if countries opt for the stick, retaliation could mean things get worse before they get better. That doesn’t make it any easier for businesses to make clear-cut decisions about major investments in their supply chains, so we can expect volatility to stick around for the foreseeable future.
The UK, meanwhile, may seem to have fared better than some, but its deep ties to the global economy make a slowdown in growth almost unavoidable and the FTSE 100 has been caught up in the global market sell-off. The government is taking a pragmatic approach, hoping for a trade deal that could ease some of the tariff burden. However, with uncertainty looming large, where we go from here is hard to call and markets rarely respond well to uncertainty.
It’s hard to find many winners, but gold prices continued to rally as investors flocked to safer assets, reaching a fresh all-time high in the aftermath of Trump’s announcement, before pulling back a touch this morning. There’s a lot of debate about whether gold adds real value to a portfolio in the long run, but investors are clearly leaning in to take some shorter-term risk off the table.
Oil prices have sunk as markets adjust to the impact of sweeping tariffs, which are expected to weigh heavily on global growth. Adding to the sombre mood, US crude inventories unexpectedly surged last week, defying forecasts of a 2-million-barrel drawdown.
