Trump

Trump’s tariff tsunami: the latest trade move rocks markets – how investors can navigate the storm

Jacob Falkencrone

Global Head of Investment Strategy

Key points:

  • Tariff shock: Trump’s new tariffs, the highest in a century, triggered a sharp global market selloff and increased recession fears.
  • Who is in the spotlight: Countries with large trade surpluses like China, Vietnam, and the EU face steep tariffs, potentially causing widespread economic disruption and retaliation.
  • Stay calm: Investors should avoid panic, stick to long-term plans, diversify portfolios, and look for buying opportunities amid market volatility.

As tariffs reach the highest level in a century, President Trump’s bold move shakes global markets, leaving investors to weigh their next move.

In what President Donald Trump labelled a “Liberation Day” for the American economy, April 2, 2025, saw the unveiling of the broadest and most aggressive tariffs imposed by the United States in over 100 years. Markets around the globe reeled in response, with investors swiftly retreating to safety amid rising fears of an escalating global trade war.

But what exactly was announced, who will it impact, and crucially, what could investors do now?

What exactly did Trump announce – and why?

President Trump introduced two key measures:
  • A 10% universal baseline tariff imposed on nearly all goods imported into the US, starting April 5.
  • Reciprocal tariffs for about 60 countries accused of maintaining large trade surpluses or unfair trading barriers against the US, kicking in from April 9. For instance, China will face a hefty additional 34% tariff, pushing its total levy above 50%, while Europe and Japan face 20% and 24%, respectively.

Trump argues these aggressive tariffs are essential to protect US industries from what he terms decades of being “ripped off” by trading partners. He has framed these tariffs as a fair exchange: "They do it to us, we do it to them."

Who will feel the pinch – and by how much?

Countries with significant trade surpluses with the US face steep hikes, with especially harsh penalties hitting Asia. Vietnam will now face a staggering 46% tariff rate, and Taiwan and Thailand 32% and 36%, respectively. The European Union is staring at a 20% tariff a figure that sparked immediate concerns and warnings of retaliation.

Notably, Canada and Mexico escaped the reciprocal tariffs, retaining exemptions under USMCA rules, although existing levies remain on goods tied to issues like drug trafficking and immigration.

Market reaction: a day of shockwaves

Markets, caught off guard by the severity of Trump’s tariffs, reacted dramatically. US stock futures plummeted, with the likes of Apple, Amazon, and Nike declining more than 6% as fears intensified that disrupted global supply chains would hit corporate profits. Asian markets mirrored this uncertainty, with Japan's Topix index slumping 3.8%. European stock markets are painted in red as well.

Gold soared to a record high above USD 3,150 per ounce, reflecting investors' scramble for safe assets. Meanwhile, US treasury yields dropped sharply as bonds rallied – another clear indication of heightened investor caution.

Economic implications: short-term pain, long-term uncertainty

While Trump claims the move will invigorate US manufacturing, many economists warn of potential negative impacts on the economy. The tariff offensive marks a significant economic turning point. With the US now enforcing what amounts to the steepest trade barriers in a century, the risks are more than just theoretical—they are visible in real time, and they are mounting.

The immediate concern is the US economy, where the average effective tariff rate is jumping nearly 19 percentage points. That’s a direct tax on consumption and corporate costs, especially for industries relying on imported materials. The result? Higher prices, tighter margins, weaker growth—and a heightened risk of recession. Economists warn that these tariffs could accelerate the arrival of stagflation, where inflation rises even as the economy stagnates or contracts

Globally, the picture is just as concerning. China could lose up to 2.4 percentage points of GDP growth, according to recent forecasts, and the ripple effects could hit Europe, Asia, and emerging markets hard. This isn’t just a US-centric problem—it’s a potential global slowdown in the making.

Is this the end or just the beginning?

Given the scale and boldness of Trump’s latest move, one might ask if there’s further room for escalation. Unfortunately, the answer is yes. The reciprocal tariffs are structured separately from the baseline tariff, suggesting the possibility that the additional tariffs might be negotiated down over time—or raised further if retaliation escalates into a full-scale trade war. This is clearly a fluid, developing story with potentially far-reaching economic consequences. The current tariffs may very well mark the beginning rather than the end of Trump’s aggressive trade policy moves.

Amid the escalating tension, Treasury Secretary Scott Bessent offered a glimmer of stability, calling the new tariffs “the high end of the number” and urging US trade partners not to retaliate. “As long as you don’t retaliate, this is the ceiling,” Bessent said, signalling that the White House may be open to negotiations if others show restraint.

But that hope could be short-lived. The European Union has already hinted at countermeasures, with Commission President Ursula von der Leyen stating the EU “stands ready to act” if targeted unfairly. Given that Europe faces a 20% tariff on its exports to the US—hitting industries like cars, wine, and luxury goods—retaliation seems not only possible, but likely. If the EU, China, or others respond in kind, Bessent’s “ceiling” could crack—and turn into a floor for further escalation.

This looming threat of tit-for-tat tariffs clouds any potential path toward de-escalation. What began as a bold, if unilateral, attempt to “rebalance” trade could spiral into a multi-front conflict with no easy off-ramp.

Investor insights: navigating the uncertainty

As a retail investor, the immediate reaction might be to panic and consider fleeing to safe havens or cash. However, now is exactly the time for clear, calm, and rational decision-making. Here's how you might consider responding:

1. Stay calm and stick to your plan
While the volatility can feel unnerving, historically, sudden market downturns have eventually recovered. Avoid making emotional decisions—stick to your long-term investment strategy.

2. Diversify more than ever
If you haven’t already diversified, now is a perfect reminder to avoid putting all your eggs in one basket. Diversifying across industries, regions, and asset classes can help buffer your portfolio against trade policy shocks.

3. Seize opportunities wisely
Market volatility often creates buying opportunities. Quality companies with strong fundamentals might now be trading at attractive discounts due to broader panic selling.

4. Defensive sectors are your allies
Focus on industries less sensitive to global trade, such as healthcare, utilities, and consumer staples. These sectors often prove resilient in turbulent times.

5. Re-evaluate exposure to vulnerable Industries
Industries significantly reliant on global supply chains—such as automotive and tech—could feel sustained pressure. Consider carefully if these holdings align with your risk tolerance.

Investor takeaway

As dramatic as these announcements are, they should serve as a clear reminder to maintain discipline, diversify, and manage risk carefully. Times like these test investor resolve but also create opportunities for those who remain steady and strategic. Trump's tariffs might bring short-term disruption, but staying informed and keeping a clear, long-term perspective remains the best approach for any retail investor navigating this turbulent market environment.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.