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, , 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.”