What’s Happened?

Yesterday was Donald Trump’s so called, “Liberation Day” that saw extensive blanket and additional reciprocal tariffs being announced, which will result in:

• A 10% levy on all imports into the US would come into effect on April 5th.
• There are also additional duties imposed on approximately 60 nations, including a 54% tariff on China, 20% on the EU, 24% on Japan, and 26% on India, each coming into effect on April 9th.

What does it mean?

Essentially, it could result in higher prices for US consumers and lower demand for imports from abroad. This will impact a range of sectors ranging from autos to agriculture produce but will also result in additional upheaval in markets globally and may increase inflation.

Why has this happened?

The US is attempting to re industrialise – that means bringing back its manufacturing base to America that’s been offshored over the years to different countries, which forms part of President Trump’s “America First” agenda.

Does this affect Ireland?

Yes, we will be subject to the 20% tariff applied to the EU. This will affect Irish exporters with high exposure to the US market. Whilst pharmaceuticals currently remain exempt from tariffs, there is a concern that they may be introduced further down the line.

Our CIO, John Mullane gave his view:

“The measures announced on ‘Liberation Day’ have been more extensive than were anticipated and have resulted in increased short-term volatility in financial markets. The tariffs announced however are very much likely to be the opening gambit of negotiations by a President that views himself as skilled in the ‘Art of the Deal’.

In fact, many of the United States, key trading partners, including the EU are reported to have already prepared potential concessions, which could result in tariffs being reduced or even being removed altogether. Countermeasures may be applied in the short term however and trade negotiations, are likely to take time and this will represent a headwind to economic growth and risk assets in the interim.”

A long term approach

For investors, it’s important to bear in mind financial markets have successfully navigated many significant economic disruptions in recent years ranging from the outbreak of war in Ukraine, Covid-19 and Brexit – tariff disruption is likely to be no different. As a result, the best protection is to focus on the long term and to stay invested in a well-diversified portfolio, which contains the right mix of risk protection and risk seeking assets to meet your unique financial goals.

Find out more information on discretionary investing

Written by John Mullane, CIO Cantor Fitzgerald