{"id":19634,"date":"2025-04-04T13:44:18","date_gmt":"2025-04-04T13:44:18","guid":{"rendered":"https:\/\/theprogenygroup.com\/knowledge-hub\/president-trumps-us-tariffs-what-they-mean-for-long-term-investors\/"},"modified":"2025-04-10T09:41:21","modified_gmt":"2025-04-10T09:41:21","slug":"president-trumps-us-tariffs-what-they-mean-for-long-term-investors","status":"publish","type":"post","link":"https:\/\/theprogenygroup.com\/en-be\/knowledge-hub\/president-trumps-us-tariffs-what-they-mean-for-long-term-investors\/","title":{"rendered":"President Trump’s US Tariffs \u2013 What they mean for long-term investors"},"content":{"rendered":"\n
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On Wednesday 2nd<\/sup> April, dubbed ‘Liberation Day’, President Trump announced the much-anticipated new round of global tariffs on goods entering the United States.<\/strong><\/p>\n\n\n\n

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The measures implemented a 10% tariff globally from the 5th April and a series of further ‘reciprocal’ tariffs with some countries (from the 9th April), including the UK (10%), EU (20%), China (34% on top of the existing 20%), Japan (24%) and Vietnam (46%). Some specific items such as auto parts will also have more punitive levies added to them on import to the US too. <\/p>\n\n\n\n

For the United States, the architect of the post-World War Two and Cold War liberal consensus, to increase tariffs unilaterally and dramatically in this fashion is clearly a substantial event geopolitically, economically and for financial markets.
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Market Reactions \u2013 Short-Term vs Long-Term<\/strong><\/h2>\n\n\n\n

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Whenever significant economic policies are proposed or enacted, financial markets often experience volatility. This was evident during Trump\u2019s first term, when tariff announcements led to market swings.
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However, long-term investors who remained committed to their strategy saw continued growth as markets adjusted. Timing the market based on political developments is notoriously difficult, and history has demonstrated that staying invested through various cycles yields better results than reacting to short-term fluctuations, as the chart below demonstrates looking at US<\/a> Presidential terms. <\/p>\n\n\n\n

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Source: Dimensional, 202<\/em>3<\/p>\n\n\n\n

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Diversification \u2013 Staying on course is important<\/strong><\/h2>\n\n\n\n

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During times of market volatility, it is important to consider the mantra of \u2018time in the market\u2019 rather than \u2018timing the market.\u2019 While tariffs may have sector-specific implications – such as impacting manufacturing costs or corporate earnings – these factors are just one piece of a much larger economic puzzle. Overreacting to policy changes can lead to emotional decision-making, which often results in missed opportunities when markets recover.
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It is essential to view U.S. policies like tariffs within the broader context of global investment trends. While tariffs can influence trade and corporate profits, the global economy is vast and resilient. Diversification remains a key strategy, helping to mitigate risks associated with any single policy decision. As history has shown, markets have weathered trade wars, political shifts, and economic uncertainties, and long-term investment strategies have consistently delivered strong returns as seen below:

Growth of $1<\/strong><\/p>\n\n\n\n

1970 – 2023
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Source: Dimensional, 2024<\/em> <\/p>\n\n\n\n

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We believe that markets work reasonably well,<\/em> and that risk and returns are related.<\/em> But most importantly, diversification is a risk management tool. With these overarching core beliefs, we have built a framework of five principles that we implement every time we invest.
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Getting the asset mix right is crucial. \u200b Choosing the appropriate mix by considering the risk appetite is key to achieving expected returns. The second step is to spread the risk of the selected assets by diversifying them. Owning a well-diversified portfolio helps drive long-term returns, whilst also providing an element of protection against uncontrollable macro-economic events.
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Our third and fourth principle may look similarly related however they differ. When we say financial costs, we refer to cost of tax, \u2018all-in\u2019 costs (e.g. ongoing charges, transaction charges). Emotional costs on the other hand, are relating to a client\u2019s behavioural mindset when it comes to investing.

Those who suffer from regret, pride, greed and panic tend to result in trying to guess market timing, which more than often cause a negative impact on investment returns. Take out the emotions and make decisions based on quantitative analysis rather than making behavioural choices.
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Our fifth and final step is rebalancing <\/strong>the portfolio. <\/strong>The purpose of rebalancing is to control risk, and to ensure that clients are not exposed to more risk than they agreed to take.<\/p>\n\n\n\n

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Final Thoughts<\/strong><\/h2>\n\n\n\n

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Clearly, we are in unprecedented territory, and it is difficult to make firm predictions. In times like these we rely on our philosophy and principles, which is to be disciplined, manage emotions and tune out the noise.
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As we have seen many times over, markets tend to react and then recover, and we do not see this situation as any different. The global environment is even more uncertain than usual, but this has not been without precedent.
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As ever, it is imperative that we remain diversified and focused on long-term growth – with principles that have proved effective time and time again.

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