The big three (April 2025)

1. "America first" policy rocks global markets

President Trump's "Liberation Day" tariff package announced on April 2 has sent shockwaves through global markets. The administration invoked emergency powers to impose a 10% baseline tariff on all imports effective April 5, with targeted countries facing steeper penalties. China has seen duties reach 104% on April 9, while foreign-made automobiles face an immediate 25% tariff.

Financial markets reacted with alarm, with the S&P 500 plunging nearly 5% on April 3 - its worst day since 2020. International response has been swift, with China announcing retaliatory measures and European leaders warning of a trade war. The EU's trade commissioner called the move "economic aggression". Economists estimate these tariffs will cost American households over $2,100 annually and potentially shrink U.S. GDP by 0.4%.

2. Investor panic spreads as economic indicators flash red

The tariff shock has amplified market anxiety, triggering volatility across major indices. The VIX has surged above 40, nearly doubling from January levels. The S&P 500 has retreated 17% from its February peak, with tech stocks suffering as investors question the sustainability of recent AI-driven gains. European markets have been hit equally hard, with the FTSE 100 falling just under 5% on April 4 (its worst drop since 2020), while the DAX and CAC 40 slid over 3%. These indices continued their dive into the April 7 where most fell a further 4%. Manufacturing and retail sectors face pressure with higher import costs anticipated.

Currency markets are also seeing significant fluctuations and gold rallied to new highs during the week commencing March 31. Consumer sentiment experienced its largest month-over-month drop since August 2021, and the ISM Manufacturing PMI employment component slipped to 47.6, signalling a contraction. With recession probabilities now exceeding 50% according to several major banks, investors are increasingly adopting defensive positions.

3. Supply chain disruptions cause pressure on UK business margins

President Trump's tariffs are putting significant pressure on businesses, particularly those reliant on imports. Apparel retailers face significant challenges from US tariffs, with H&M and Primark potentially needing price increases of up to 21% to offset duties on imports from China and Bangladesh. H&M faces the steepest challenge, requiring an 18% US price increase to offset a potential 32% operating profits hit without supply chain adjustments. Next and Zalando remain relatively insulated with minimal US exposure, allowing them to potentially gain market share as competitors struggle with price adjustments.

In the UK, Jaguar Land Rover and Aston Martin face 25% tariffs on cars exported to the US, potentially leading to reduced production and job cuts, with the Institute for Public Policy Research suggesting over 25,000 UK automotive jobs could be at risk. The Scotch whisky industry, with the US being its top export destination worth £1bn annually, faces severe challenges, with major player Diageo at risk of profit margin hits. Luxury brands like Gucci and Burberry could also see declines in sales due to EU tariffs, with Burberry already impacted by the 20% tariff on EU goods.