Our Message to You: Stay the Course
We understand that this period of uncertainty can be unsettling. But it’s important to remember that volatility is a normal part of the investment journey. Attempting to time the market often results in missed opportunities, particularly when recoveries come quickly and unexpectedly.
The core principles of long-term investing remain unchanged.
A disciplined, diversified investment strategy continues to be the most reliable way to navigate short-term noise and achieve lasting financial goals.
What Are Tariffs and Why Do They Matter?
Tariffs are taxes imposed on imported goods. Governments use them to protect domestic industries and generate revenue. However, they can also spark trade tensions and lead to uncertainty in global markets—as we are witnessing now.
Markets have responded with volatility. Although uncomfortable, this kind of reaction is not unusual. Tariff negotiations often begin with bold statements but are typically followed by behind-the-scenes diplomacy, as seen previously with Canada and Mexico.
Short-Term Effects
In the U.S., economic growth expectations have been downgraded. Business confidence is lower, capital spending is being cut back, and consumer demand may soften. Unemployment could rise as companies become more cautious.
In the UK, however, there is an opportunity to establish favourable trade agreements in the wake of Brexit, especially with the U.S. and China. In the immediate term, UK consumers might benefit from lower inflation, more competitive mortgage rates, and cheaper imported goods, particularly from China, which is actively seeking new trade partners.
Market movements have been sharp, with heightened volatility across equities and growing demand for safer assets like gold. Bond markets have also attracted increased attention, with UK gilts offering potentially attractive yields. The weakening of the U.S. dollar reflects broader investor concerns.
Insights from Quilter Cheviot
Our colleagues at Quilter Cheviot believe the U.S. is facing mounting pressure due to unsustainable debt levels. They note that President Trump’s focus is primarily on China, and that the UK is well-positioned to benefit from this global realignment by pushing for new trade deals.
Fund managers are responding to these shifts by reducing exposure to U.S. markets and turning to high-quality, stable companies based in the UK and Europe. There is particular interest in resilient sectors such as defence, which are seen as potentially benefiting from shifting geopolitical priorities.
They also point out that periods of market turbulence historically create strong investment opportunities. Evidence shows that remaining invested during such times is the best approach for long-term wealth creation. Selling during a downturn often means missing the recovery and the growth that follows.
Insights from Close Brothers Asset Management
Close Brothers highlight that these developments represent more than short-term volatility—they reflect a deeper structural shift in how the U.S. engages with the rest of the world. There is potential for increasing isolationism, particularly if new trade deals cannot be secured. While China and Canada have already announced countermeasures, the EU is still considering its response. The UK, meanwhile, is working to complete its own negotiations.
China appears to be taking a long-term view by focusing on domestic consumer confidence and internal demand. This strategy may help mitigate the negative effects of reduced international trade.
Close Brothers also emphasise the uncertainty caused by mixed messaging from the Trump administration. This has made investors cautious, increasing the risk of slower economic growth, persistent inflation, or even stagflation. Nevertheless, central banks are expected to continue supporting markets by keeping interest rates low, helping to soften the impact of economic slowdowns. The U.S. service sector remains a bright spot, but overall economic sentiment has weakened.
Visual Insights: The Power of Staying Invested
To further illustrate the importance of maintaining a long-term investment perspective, we’ve included several informative graphics with this newsletter. These visuals highlight key insights, such as how remaining invested can reduce the volatility of returns over time, the potential costs of missing the market’s best days, and the emotional cycle investors often experience during market fluctuation
We are actively monitoring these developments and are in regular contact with fund managers to ensure our investment proposition remains well-positioned for both risk management and future growth.
If you have questions or would like to discuss your portfolio in more detail, we are here for you. Please don’t hesitate to get in touch.
