US tariffs shake markets - What you need to know

Understand the implications for portfolios and supporting your clients through short-term volatility as markets react to new US trade measures and rising global uncertainty.

On 3rd April, the US government announced a series of new tariffs on imported goods, including a universal 10% tariff on all imports. In addition, significantly higher 'reciprocal' tariffs will apply to goods from countries with large trade surpluses with the US – 34% on Chinese goods, 24% on Japanese goods and 20% on goods from the EU.

Financial markets have reacted sharply, with global equities falling. The scale and speed of the announcement – along with uncertainty around potential retaliation – has unsettled investors and raised concerns about inflation, trade disruption and global growth.

Implications for markets and portfolios

The situation is evolving rapidly, and the full implications are not yet clear. Investors around the world are watching closely for signs of how other countries might respond and what this could mean for global trade, inflation and economic growth in the months ahead.

In the US, inflation is expected to rise modestly as a result of the tariffs, but the Federal Reserve may prioritise growth concerns and continue to ease policy if needed. Other central banks, such as the European Central Bank and Bank of Japan, still have some room to act if global demand slows.

Key concerns in the coming weeks include:

• The potential for retaliatory tariffs from affected countries.
• The impact on business confidence and investment decisions.
• The knock-on effect on supply chains and consumer prices.

What this means for Wesleyan investors

Commenting on the impact for Wesleyan’s portfolios and the investment team’s approach, Martin Lawrence, Director of Investments Wesleyan Assurance Society, says: "President Trump’s announcement has unfortunately triggered a broad sell-off in global markets – with the exception of perceived safer areas like government bonds. This has affected fund returns and customer valuations across the industry, including at Wesleyan. However, our diversified approach and active positioning across asset classes, regions and sectors means we’re well placed to absorb short-term shocks.

"While tariff announcements are likely to drive market direction in the near term, volatility also creates opportunity. As long-term investors, we look for value during market falls – and we believe that, over time, returns will recover as valuations adjust."

Our investment team continues to monitor developments closely. At this stage, we see a wide range of possible outcomes – from an eventual easing of trade tensions through negotiation, to a deeper escalation into a prolonged trade dispute.

For now, our portfolios remain diversified and actively managed. We are not making immediate changes based on short-term headlines, but we remain ready to respond as more information becomes available. Our approach – with exposure to both equities and fixed income – helps cushion the impact of volatility in any one part of the market.

Active management also gives us the flexibility to respond to changing conditions. Should the situation evolve further, our team is well placed to adjust portfolios as needed.

Supporting your client conversations

Your clients may have seen headlines or noticed recent fluctuations in the value of their investments. Some may be feeling concerned – particularly those who are newer to investing or nearing retirement.

Here are some key points to reinforce in conversations:

• Market volatility is normal – especially in response to unexpected political events.
• Long-term investing works – history shows that markets have recovered from shocks including trade disputes, pandemics and recessions.
• Timing the market rarely pays off – missing just a few of the best days can have a major impact on long-term returns.
• Active management adds value – our in-house team is constantly monitoring developments and adjusting portfolios when needed.
• You’re not alone – clients have the reassurance of professional advice and expert management behind their investments.

Next steps

You don’t need to take any immediate action, but if clients have questions or want to discuss their plans, we’re here to support you.

We’ll continue to provide updates as the situation evolves. In the meantime, if you’d like a deeper market briefing or support with client messaging, please get in touch with your usual Wesleyan contact or the investment team.