Investment Strategies
Investors Shed Stocks, US Dollar After Tariffs – Reactions

President Trump's announcement on Wednesday of sweeping tariffs on a raft of countries around the world sent stock markets lower, pushed up bond prices, and the dollar weakened overnight. Wealth managers give their initial reactions.
US stock futures slumped yesterday, the dollar weakened and
yields on US Treasuries – which move in the opposite direction to
their prices – fell after President Donald Trump announced
sweeping tariffs of at least 10 per cent on a host of countries
on Wednesday evening.
Countries such as China, Japan and Vietnam were hit particularly
severely. The European Union was hit with a 20 per cent tariff;
the UK – now outside the EU – faces a 10 per cent rate. Notably,
Trump did not impose new imposts on Canada and Mexico but those
countries are already targeted for 25 per cent tariffs.
Asian and European bourses slid. Gold has risen above $3,100 per
ounce – a class “safe haven” measure. The VIX Index, which tracks
volatility in US equities and another “fear gauge,” is at 26.2 as
of mid-afternoon on Thursday, and is up more than 50 per cent in
the past five days.
Besides fears about the depressing impact on global trade and
rising domestic prices for certain goods in the US – at least in
the short term – the measures also raise concerns on the
geopolitical impact.
Far from isolating China, which is a country with which Trump has
been at odds, it may force Asian nations more closely into
Beijing’s orbit as they seek to protect export earnings. And it
may, ironically, also strengthen demands for European nations –
inside and outside the EU – to do the same. Such developments may
also, over time, have implications for wealth management. Several
international banks, including those headquartered in the US, or
Switzerland, such as Citi Private Bank and UBS, respectively,
have sought to tap the rising middle class of North and Southeast
Asia via hubs in Singapore and Hong Kong, and other
locations.
Here are reactions from a number of financial firms to the
tariffs, which take effect from 5 April.
DBS, chief investment office
Trump’s tariffs: Negotiation tool or ideological? It was often
said that Trump’s tariff threat is, perhaps, a negotiation tool
for countries to come to the table and cut a “deal” with the
president. But the imposition of a 10 per cent universal tariff
suggests that this could be ideological after all, with the US
president potentially seeing tariffs as a perfect tool
for resetting trade relationships and the global world
order. Now, with the EU stating its intent to retaliate if
negotiations fail, financial markets should brace for a period of
turmoil in the age of disruption.
There are no winners in a tariff war. And escalating global trade
tension will only mean that the global growth-inflation dynamics
will deteriorate from here. Should the major economic blocs fail
to cut a deal with Trump in lowering the tariffs, brace for
negative economic and earnings shocks in the coming
quarters.
Favour markets with room for fiscal stimulus: In such an
environment, countries with the capacity to introduce fiscal
stimulus will be better positioned as global aggregate demand
slows; these include China and Europe. China has significant
leg room for fiscal stimulus given that its central government
leverage ratio stands at only 25 per cent of GDP (vs average of
75 per cent for G20 peers). This provides additional flexibility
for the government to introduce government-led stimulus and drive
domestic consumption.
Over in Europe, Germany recently approved a €500
billion ($552 billion) infrastructure fund that aims to
modernise key areas such as transport, energy, and
digitalisation, which will drive economic growth. This move has
also prompted discussion within the EU about loosening fiscal
constraints, signalling a shift from its traditionally cautious
fiscal stance.
Favour companies with the capacity to shift production back to
the US: Escalating global trade tension has triggered a rethink
of manufacturing strategies (what was once deemed undoable), with
companies moving production back to the US now being actively
pursued. Indeed, a growing number of companies have pre-emptively
begun shifting operations back to the US, especially those with
high profit margins and high-entry-barrier sectors (such as
semiconductors, pharmaceuticals, aerospace, and defence).
Bonds: Favour high quality credit in A/BBB: Stick with high
quality credit in the A/BBB bucket, as lower growth expectations
could lead to more quality discrimination in credit. IG credit
fundamentals are improving and would withstand a tariff shock
better.
Gold has long been touted as an important portfolio risk
diversifier and we reiterated an overweight call for the metal.
The call has proven prescient, with gold climbing to new record
highs (19 and counting so far this year) amid tariff and trade
war worries post-Liberation Day.
Global chief investment officer, Michael Strobaek, and
chief economist and CIO Switzerland, Samy Chaar
US tariffs will raise import duties to levels not seen in
decades, raising inflation and recession risks for the US, and
global economies. While the US President’s announcements did not
mention room for negotiation, [we] expect efforts to mitigate
effective rates. The Federal Reserve has additional economic
risks to manage, and its interest rate could fall as low as 2 per
cent if the US falls into recession. [We] expect a period of
risk-aversion in financial markets. US Treasury Inflation
Protected Securities, the Swiss franc, Japanese yen and gold
should offer opportunities.
Adrian Ash, director of research,
BullionVault
Short term, Trump’s Liberation Day is proving to be a ‘buy the
rumour, sell the fact’ event for gold prices. Because while gold
spiked on Trump’s tariffs announcement to yet another record high
in US dollars, it’s gone the other way in sterling, euros and
most other major currencies, erasing all this week’s previous
jump as the US currency sinks on the FX market.
Longer term, however, the reasons behind gold’s stellar start to
2025 are only stronger now that Trump has announced his tariffs.
Weaker trade, higher input costs and shrinking margins are badly
hurting the stock market, while geopolitical mistrust is
deepening. Such a gloomy outlook for economic growth offers the
perfect backdrop for further gains in gold.
Vladimir Zdorovenin, head of international insurance
solutions, at PineBridge Investments
With escalating trade tensions, geopolitical risks, and an
increasingly uncertain global growth outlook roiling the markets,
we believe that insurers should diversify their fixed income
portfolios more broadly, aiming for a truly global, active
allocation across public and private assets in developed and
emerging markets.
Amid a turbulent and highly uncertain environment, insurers
continue to show a hearty appetite for the full spectrum of
private credit. As competitive pressure builds in the upper end
of the direct lending market, we believe that the lower middle
market remains attractive thanks to the combination of persistent
spreads, stable valuations, and sound creditor protections.
Daniel Murray, deputy CIO and global head of
research at EFG, the Swiss private bank
The road to hell is famously paved with good intentions. The
wide-ranging tariffs announced by the US administration overnight
should be viewed in this context. Tariffs were applied to a
broader range of countries, including historic US allies, and at
higher rates than had been expected.
The good intent in this instance relies on the assumption that
tariffs will raise government revenues – thereby reducing the
size of the budget deficit and potentially allowing room for tax
cuts elsewhere – whilst at the same time encouraging more
domestic investment and production. Whilst these might be worthy
aims, history strongly suggests that such a naïve approach to
trade policy does not end well.
The risk of a US and global recession has increased directly
because of the US tariffs, as has the likelihood that inflation
stays higher for longer. In turn, the possibility of stagflation
makes life very difficult for central banks. Immediately
following the tariff announcement, Treasuries rallied as part of
the risk-off trade. However, the medium-term path for Treasuries
is far more uncertain due to the upward pressure on prices that
is expected to follow tariff implementation. As was seen in 2022
and 2023, when faced with a choice between fighting inflation and
supporting the economy, central bankers place greater weight on
the former, at least in the short term, for fear that if
inflation becomes embedded the longer-term consequences will
be even more painful.
The market’s interpretation of the tariffs speaks volumes. Asian
markets have experienced significant declines overnight while
equity index futures are meaningfully lower almost everywhere.
The S&P500 future is down around 3% at the time of
writing.
George Maris, chief investment officer and global head of
equities at Principal Asset Management
We thought statistical one-in-a-hundred-year events were rare but
now accept these occur with greater frequency than predicted.
This evolution to an environment of recurring uncertainty
requires a sharper and more disciplined approach to investing.
Prior to the [global financial crisis], the parties in power had
less impact on market stability. Post-GFC, markets more regularly
confront material regulatory and geopolitical changes. These
change investment backdrops and create significant impacts
globally. The market keeps waiting for things to revert to
pre-GFC norms, but they have not and likely will not any time
soon.
From an investment perspective, this fundamentally reinforces how
we assess risk and opportunity. The key is building resilient
portfolios - not merely by investing in stable companies but by
focusing on companies able to shape their destiny regardless of
the macroeconomic backdrop. Unpredictable environments make it
crucial to invest in businesses able to withstand volatility,
adapt to emerging opportunities and risks, and generate economic
value. This is the foundation of private capital investing -
buying at an attractive price and selling at a disciplined price.
The same principle applies in public markets.”