The return of Donald Trump to the White House has brought a fresh wave of trade uncertainty. For UK investors, this isn’t just another chapter in US politics – it’s a direct factor influencing portfolios, risk management strategies, and future capital allocation.
Throughout his election campaign in late 2024, Trump made his ‘America First’ approach to foreign policy clear, promising tariffs exceeding 60% on Chinese imports, as reported by the BBC.
Since his inauguration in January 2025, Trump has followed through on his campaign promises to implement aggressive tariff. The headline figure – 104% tariffs on Chinese imports as of 9th April. But the impact hasn’t stopped there.
On top of introducing higher tariffs for China, Trump has also placed a 10% baseline tariff on almost all foreign imports to the US from a handful countries including the UK, New Zealand, Australia, and Saudi Arabia.
A baseline 10% tariff has been introduced on nearly all foreign imports into the US, catching traditional allies such as the UK, Australia, and New Zealand. Meanwhile, targeted tariffs – branded “specific reciprocal tariffs” by the White House – have been applied to countries deemed to have unfair trade barriers or policies hostile to US economic interests: 20% for the European Union, 46% for Vietnam, 49% for Cambodia, and 36% for Thailand.
In response to these rates, many counties have expressed plans to implement retaliatory tariffs on US products, as reported by The Wall Street Journal. In direct response to these tariffs that The European Union describes as unjustified, disruptive, and harmful to businesses and consumers, the EU has introduced a range of countermeasures that apply to US goods exports worth up to €26 billion.
Canada and China also followed suit with Canadian officials imposing a 25% tariff on around $42 billion worth of U.S. goods and China implementing retaliatory levies of initially 34% on US goods, before increasing it to 84%, and then 125%.
Equity markets responded sharply. Both US and European indices dropped to multi-year lows in early April before partially recovering. That recovery was prompted, in part, by a policy reversal: on April 11th, the BBC reported that the US paused most of the new tariffs for 90 days (China being the main exception). While some officials, such as Treasury Secretary Scott Bessent, have described this as a deliberate strategy to strengthen the US negotiating position, the sudden shift has only added to investor confusion.
For UK investors, the question is not just how to interpret this volatility – but how to respond to it.
1. Volatility is not the same as risk
The sharp market swings we’ve seen are concerning, but they’re not unprecedented. Trade-related uncertainty will likely remain elevated in the months ahead, but that doesn’t mean long-term fundamentals have disappeared. Policy noise – however dramatic – doesn’t always translate into structural change.
2. Defensive positioning may be appropriate
In times like this, shifting some capital into more resilient sectors – such as healthcare, consumer staples, or utilities – can help manage downside risk. Quality government bonds also offer a degree of safety, and some emerging markets may benefit from trade realignment if tensions between the US and China continue.
3. Monitor FX exposure carefully
A prolonged standoff could result in further dollar strength, especially if capital continues to flow into US assets as a perceived safe haven. If your exposure to US equities is significant, consider whether you’re comfortable with the associated currency risk.
4. Stay diversified – and patient.
The temptation to make reactive investment decisions in a volatile environment is understandable. But history shows that markets tend to adjust over time. Maintaining a diversified, globally balanced portfolio remains the most effective way to navigate unpredictable macro events.
We are no longer observers to US trade policy – we are participants. Tariffs, retaliations, pauses, and renegotiations will continue to affect sentiment and capital flows globally. For UK investors, the key is to stay informed, remain flexible, and avoid short-term overreactions to a long-term challenge.