The global economy is facing significant disruption following President Donald Trump’s recent imposition of trade tariffs. These sweeping measures have triggered sharp declines in stock markets worldwide, leaving many investors and businesses concerned about the potential long-term impact.
Market reactions to tariffs
This morning (7th April 2025), the UK’s FTSE 100 index fell by nearly 6%, reflecting widespread unease about the economic fallout from Trump’s tariff policies. Germany’s DAX also dropped around 5%, while Asian markets saw sharper declines overnight, with Hong Kong’s Hang Seng index plunging over 10%.
President Trump announced these tariffs last week (2nd April), calling it “Liberation Day.” A baseline 10% tariff now applies to all U.S. imports, with higher rates targeting specific industries and countries, including a 20% tariff on goods from the EU. These measures have sparked fears of a prolonged trade war, leading to heightened market volatility and uncertainty across global economies.
Why you should avoid knee-jerk reactions
Market downturns often provoke emotional responses, such as panic selling or abrupt changes to investment strategies. However, history shows that markets tend to recover over time. Making impulsive decisions now could lock in losses and derail your long-term financial plan.
Here’s why you should resist the urge to make drastic moves:
- Selling investments during a downturn locks in losses that could otherwise recover when the market rebounds.
- Reducing contributions to pensions and investments during a market drop means you miss out on the opportunity to buy assets at lower prices, which could lead to greater returns in the future.
Staying focused on long-term goals is the key to weathering short-term volatility. Maintaining a diversified portfolio and sticking to a disciplined investing approach are proven ways to mitigate risk. Please rest reassured that this is a key strategy TPD Wealth Management has always tried to employ.
Also, we ensure your investments match your risk tolerance and long-term goals so you can feel more secure during times of market uncertainty.
We’re here to help
While it’s natural to feel uneasy about market fluctuations, reacting emotionally can lead to poor financial outcomes. Instead, focus on the fundamentals: a diversified portfolio, regular contributions, and a clear understanding of your financial goals. Remember that volatility is temporary, but your long-term strategy is built for resilience and growth
As your trusted financial advisers, our priority is helping you navigate uncertainty with confidence. If you have any questions or concerns in light of recent events, please don’t hesitate to call us.
We’re here to guide you through these uncertain times with confidence and clarity.
