UK wealth manager Quilter, which oversees £119.6 billion ($160 billion) in customer investments, has just released its latest Investor Trends Survey, sent to 21 of the fund management institutions and representing £22 trillion of assets.

A new survey by Quilter shows that uncertainty surrounding US President Donald Trumps tariffs has led investors to downgrade US economic growth prospects and investment returns for 2025. It appears as though Europe will continue to be the main beneficiary over the course of the year.

Fund managers are preparing for Donald Trump’s reciprocal tariffs to be partially reintroduced when the 90-day tariff pause expires on 8 July, according to the survey. Eighty per cent of respondents said they think tariffs will be partially reintroduced, with 13 per cent expecting them to be largely brought back. By contrast, no one surveyed expected them to be brought back in the same shape as when they were first introduced, while just 7 per cent thought they would be dropped completely.

Asset managers also believe that a trade war expansion is likely, with managers earmarking the EU as likely to retaliate. Three-quarters of respondents believe it is likely or highly likely that the EU will retaliate. On the flipside, there was nearly unanimous agreement that the UK would not retaliate. This has rung true with the UK being the first country to strike a trade deal with Trump – although the contents of the deal do not amount to a full negotiation which could take years.

This negative sentiment is weighing on investor expectations for the US economy. One third of those surveyed believe that the US will deliver less than 1 per cent of real GDP growth in 2025, indicating that the US is susceptible to a recession this year. UK and eurozone growth forecasts have also dipped slightly, but not to the same extent.

Fund groups are expecting this to translate into poorer returns for investors with exposure to the US. The US is expected to have the worst returns, as voted for by 53 per cent of respondents. Meanwhile, the EU led the way in expectations, with 44 per cent saying it will have the best returns.

The survey, which was sent to 21 of the fund management institutions representing £22 trillion of assets, is carried out on a quarterly basis and covers forecasts for macroeconomic data and timely indicators.

“Following a trade deal with the UK and the US, and China relenting in their brinkmanship, the question on investor lips right now is what happens after the 90-day pause on Trump’s reciprocal tariffs expires,” Lindsay James, investment strategist at Quilter, said. “President Trump has clearly been prepared, or forced, to listen to markets, and fund groups are expecting this will translate into a better programme of tariffs compared to 2 April. But he also will not want a repeat of his backtracking. As ever with the current US administration, the only certainty is uncertainty, and that in itself is not good for markets.” 

“It is not surprising, therefore, to see investor expectations for US equity returns and economic growth to be downgraded,” James continued. “Europe looks like it will continue to be the main beneficiary over the course of the year, despite strong performance already being driven by the shift in attitude to defence spending. US equities may have performed well in recent weeks, but this survey highlights that Europe stands to be the winner of the cautious outlook ahead.”