President Trump's announcement on Wednesday of sweeping tariffs on a raft of countries around the world sent stock markets lower, pushed up bond prices, and the dollar weakened overnight. Wealth managers give their initial reactions.

US stock futures slumped yesterday, the dollar weakened and yields on US Treasuries – which move in the opposite direction to their prices – fell after President Donald Trump announced sweeping tariffs of at least 10 per cent on a host of countries on Wednesday evening.

Countries such as China, Japan and Vietnam were hit particularly severely. The European Union was hit with a 20 per cent tariff; the UK – now outside the EU – faces a 10 per cent rate. Notably, Trump did not impose new imposts on Canada and Mexico but those countries are already targeted for 25 per cent tariffs.

Asian and European bourses slid. Gold has risen above $3,100 per ounce – a class “safe haven” measure. The VIX Index, which tracks volatility in US equities and another “fear gauge,” is at 26.2 as of mid-afternoon on Thursday, and is up more than 50 per cent in the past five days. 

Besides fears about the depressing impact on global trade and rising domestic prices for certain goods in the US – at least in the short term – the measures also raise concerns on the geopolitical impact. 

Far from isolating China, which is a country with which Trump has been at odds, it may force Asian nations more closely into Beijing’s orbit as they seek to protect export earnings. And it may, ironically, also strengthen demands for European nations – inside and outside the EU – to do the same. Such developments may also, over time, have implications for wealth management. Several international banks, including those headquartered in the US, or Switzerland, such as Citi Private Bank and UBS, respectively, have sought to tap the rising middle class of North and Southeast Asia via hubs in Singapore and Hong Kong, and other locations. 

Here are reactions from a number of financial firms to the tariffs, which take effect from 5 April.

DBS, chief investment office
Trump’s tariffs: Negotiation tool or ideological? It was often said that Trump’s tariff threat is, perhaps, a negotiation tool for countries to come to the table and cut a “deal” with the president. But the imposition of a 10 per cent universal tariff suggests that this could be ideological after all, with the US president potentially seeing tariffs as a perfect tool for resetting trade relationships and the global world order. Now, with the EU stating its intent to retaliate if negotiations fail, financial markets should brace for a period of turmoil in the age of disruption.

There are no winners in a tariff war. And escalating global trade tension will only mean that the global growth-inflation dynamics will deteriorate from here. Should the major economic blocs fail to cut a deal with Trump in lowering the tariffs, brace for negative economic and earnings shocks in the coming quarters. 

Favour markets with room for fiscal stimulus: In such an environment, countries with the capacity to introduce fiscal stimulus will be better positioned as global aggregate demand slows; these include China and Europe. China has significant leg room for fiscal stimulus given that its central government leverage ratio stands at only 25 per cent of GDP (vs average of 75 per cent for G20 peers). This provides additional flexibility for the government to introduce government-led stimulus and drive domestic consumption.

Over in Europe, Germany recently approved a €500 billion ($552 billion) infrastructure fund that aims to modernise key areas such as transport, energy, and digitalisation, which will drive economic growth. This move has also prompted discussion within the EU about loosening fiscal constraints, signalling a shift from its traditionally cautious fiscal stance.

Favour companies with the capacity to shift production back to the US: Escalating global trade tension has triggered a rethink of manufacturing strategies (what was once deemed undoable), with companies moving production back to the US now being actively pursued. Indeed, a growing number of companies have pre-emptively begun shifting operations back to the US, especially those with high profit margins and high-entry-barrier sectors (such as semiconductors, pharmaceuticals, aerospace, and defence).

Bonds: Favour high quality credit in A/BBB: Stick with high quality credit in the A/BBB bucket, as lower growth expectations could lead to more quality discrimination in credit. IG credit fundamentals are improving and would withstand a tariff shock better.

Gold has long been touted as an important portfolio risk diversifier and we reiterated an overweight call for the metal. The call has proven prescient, with gold climbing to new record highs (19 and counting so far this year) amid tariff and trade war worries post-Liberation Day.

Global chief investment officer, Michael Strobaek, and chief economist and CIO Switzerland, Samy Chaar
US tariffs will raise import duties to levels not seen in decades, raising inflation and recession risks for the US, and global economies. While the US President’s announcements did not mention room for negotiation, [we] expect efforts to mitigate effective rates. The Federal Reserve has additional economic risks to manage, and its interest rate could fall as low as 2 per cent if the US falls into recession. [We] expect a period of risk-aversion in financial markets. US Treasury Inflation Protected Securities, the Swiss franc, Japanese yen and gold should offer opportunities.

Adrian Ash, director of research, BullionVault
Short term, Trump’s Liberation Day is proving to be a ‘buy the rumour, sell the fact’ event for gold prices. Because while gold spiked on Trump’s tariffs announcement to yet another record high in US dollars, it’s gone the other way in sterling, euros and most other major currencies, erasing all this week’s previous jump as the US currency sinks on the FX market.

Longer term, however, the reasons behind gold’s stellar start to 2025 are only stronger now that Trump has announced his tariffs. Weaker trade, higher input costs and shrinking margins are badly hurting the stock market, while geopolitical mistrust is deepening. Such a gloomy outlook for economic growth offers the perfect backdrop for further gains in gold.

Vladimir Zdorovenin, head of international insurance solutions, at PineBridge Investments
With escalating trade tensions, geopolitical risks, and an increasingly uncertain global growth outlook roiling the markets, we believe that insurers should diversify their fixed income portfolios more broadly, aiming for a truly global, active allocation across public and private assets in developed and emerging markets.

Amid a turbulent and highly uncertain environment, insurers continue to show a hearty appetite for the full spectrum of private credit. As competitive pressure builds in the upper end of the direct lending market, we believe that the lower middle market remains attractive thanks to the combination of persistent spreads, stable valuations, and sound creditor protections.

Daniel Murray, deputy CIO and global head of research at EFG, the Swiss private bank
The road to hell is famously paved with good intentions. The wide-ranging tariffs announced by the US administration overnight should be viewed in this context. Tariffs were applied to a broader range of countries, including historic US allies, and at higher rates than had been expected.

The good intent in this instance relies on the assumption that tariffs will raise government revenues – thereby reducing the size of the budget deficit and potentially allowing room for tax cuts elsewhere – whilst at the same time encouraging more domestic investment and production. Whilst these might be worthy aims, history strongly suggests that such a naïve approach to trade policy does not end well.

The risk of a US and global recession has increased directly because of the US tariffs, as has the likelihood that inflation stays higher for longer. In turn, the possibility of stagflation makes life very difficult for central banks. Immediately following the tariff announcement, Treasuries rallied as part of the risk-off trade. However, the medium-term path for Treasuries is far more uncertain due to the upward pressure on prices that is expected to follow tariff implementation. As was seen in 2022 and 2023, when faced with a choice between fighting inflation and supporting the economy, central bankers place greater weight on the former, at least in the short term, for fear that if inflation becomes embedded the longer-term consequences will be even more painful.

The market’s interpretation of the tariffs speaks volumes. Asian markets have experienced significant declines overnight while equity index futures are meaningfully lower almost everywhere. The S&P500 future is down around 3% at the time of writing.

George Maris, chief investment officer and global head of equities at Principal Asset Management
We thought statistical one-in-a-hundred-year events were rare but now accept these occur with greater frequency than predicted. This evolution to an environment of recurring uncertainty requires a sharper and more disciplined approach to investing. Prior to the [global financial crisis], the parties in power had less impact on market stability. Post-GFC, markets more regularly confront material regulatory and geopolitical changes. These change investment backdrops and create significant impacts globally. The market keeps waiting for things to revert to pre-GFC norms, but they have not and likely will not any time soon.

From an investment perspective, this fundamentally reinforces how we assess risk and opportunity. The key is building resilient portfolios - not merely by investing in stable companies but by focusing on companies able to shape their destiny regardless of the macroeconomic backdrop. Unpredictable environments make it crucial to invest in businesses able to withstand volatility, adapt to emerging opportunities and risks, and generate economic value. This is the foundation of private capital investing - buying at an attractive price and selling at a disciplined price. The same principle applies in public markets.”