Weekly Buzz: Your portfolio's guide to Trump's tariffs ⚖️

5 minute read

It may seem that Trump’s “Liberation Day” looks more like “Obliteration Day” with the S&P 500 falling 4.8% on Thursday – the worst drop since June 2020 – but it’s crucial to put this volatility into perspective.

What’s going on here?

Trump's announcement of reciprocal tariffs saw some Southeast Asian nations getting slapped with nearly 50% rates, while a "luckier" group including Singapore, the UK, Brazil, and Turkey escaped with 10%. The goal is to incentivise foreign producers to build factories stateside, pressure trading partners to drop their own trade barriers, and generate revenue to help pay for tax cuts.

But let's take a trip back to President Trump's first term where tariffs were also a central component of his trade strategy – with China getting special attention. Those tariffs similarly triggered market volatility as investors scrambled to calculate potential impacts.

Despite the uncertainty, the US economy maintained its momentum – posting 2.9% GDP growth in 2018 while unemployment figures remained low. So while tariff headlines might have your notifications lighting up, remember that wealth-building is more marathon than sprint – and that attempting to time the market based on political developments is about as reliable as weather forecasts two weeks out.

(For more on this, see: CIO Update: What you should know about President Trump’s tariffs.  And if you’d like a deeper analysis of Trump’s economic agenda, see: CIO Insights: No Pain, No Gain.)

What’s the takeaway here?

Markets may be stumbling on tariff talk, but they rarely stay down for long. While US stocks have wobbled, investors aren't panicking – they're adapting. Some are turning to safe havens like gold – up about 19% this year so far – or diversifying into markets like Europe.

This shift in allocations isn’t about moving away from the US entirely – it’s about embracing the investor's most reliable edge: diversification. Our General Investing portfolios are built with that in mind. While others might be refreshing their news feeds hourly, a well-diversified portfolio means your investments don't hinge on a single tweet.

📰 In Other News: China is shopping again

China's manufacturing purchasing managers' index (PMI) climbed to 50.5 in March – crossing above the critical 50 mark that separates growth from contraction. Its non-manufacturing counterpart touched 50.8, signalling that the services and construction sectors joined in as well.

These upticks in economic activity likely stem from Beijing's recent spending push – in early March, policymakers greenlit 300 billion yuan (USD 41 billion) worth of subsidies on consumer products. Chinese Premier Li Qiang made the government's priorities clear, naming retail consumption as the top task for the year ahead. In fact, his annual report mentioned "consumption" 27 times – the most mentions in a decade.

If you’re interested in China but want to manage its unique risks, our Flexible Portfolios might just be the right tool. They allow you to fine-tune your exposure to the country at any time, and with precision – whether through broad emerging market funds or China-specific ETFs.

These articles were written in collaboration with Finimize.

🎓 Simply Finance: Safe-haven assets

When markets get turbulent, investors tend to seek shelter in safe-haven assets – investments that typically maintain their value amid uncertainty. Gold is the quintessential safe haven but it’s not alone – US Treasury bonds or the Japanese yen, for example, can play this role too.

What makes these assets attractive during volatility, however, is also what limits them – they prioritise capital preservation over growth potential. This fundamental trade-off means that it’s less about timing the market, and more about diversification throughout market cycles.

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