蜜豆视频

President Trump has announced a major increase in tariffs on imports into the United States.

The President introduced a "baseline" tariff of 10% on imports from all other nations starting on 5 April, with higher "reciprocal" rates on specified trading partners deemed to have excessive tariff or non-tariff barriers from 9 April.

The announced tariffs include a 34-percentage-point increase to the rate on China (bringing the total increase this year to 54%), a 24% tariff on Japan, 20% on the European Union, and 31% on Switzerland. USMCA compliant goods (from Canada and Mexico) will be exempt for now. The president also reiterated earlier announced 25% tariffs on auto imports.

In technical documents, exemptions were made on copper, pharmaceuticals, semiconductors, bullion, lumber articles, and energy, as well as other certain minerals not available in the United States.

In his speech, President Trump revealed a principle that the US will impose a reciprocal tariff of half of the estimated tariff and non-tariff barriers imposed by trading partners on US exports. The president invited negotiations with trading partners, though specified that this would require lower tariffs or non-tariff barriers or additional inward investment into the United States.

Asia n equity markets fell on Thursday, with Japan's TOPIX down 3.1%. The Hang Seng index declined 1.5%, and the onshore CSI 300 slid 0.6%. S&P 500 futures are 3.3% lower at the time of writing, while the STOXX Europe 600 is down 2.3%.

Bond yields have declined, with investors seeming to focus on risks to growth rather than the inflationary impact of tariffs. At the time of writing, the two-year US yield has slipped to 3.81%, while the 10-year is at 4.09%. The US Dollar Index (DXY) is down to 101.64 and its lowest level since early October 2024, with the safe-haven yen appreciating to around 146 against the US dollar. Gold is trading at just under USD 3,100/oz, slightly retreating from close to an all-time high.

What do we think?

In the weeks ahead, we expect the White House鈥檚 executive authority to be challenged in the courts. The president announced the tariffs using the International Emergency Economic Powers Act (IEEPA), which hasn鈥檛 previously been utilized to announce such sweeping changes to economic policy. Furthermore, businesses are likely to intensify lobbying efforts. And political pressure to ease tariffs could mount as economic costs rise.

Following the 2 April action, our base case (to which we assign a 50% probability) is for tariffs to eventually be reduced from th e levels announced by the president. Trump himself invited negotiations, and Treasury Secretary Bessent said in a Bloomberg interview that the announced tariffs are 鈥渢he high end of the number,鈥� and that countries could take steps to bring tariffs down.

Ahead of the European open, EU Commission President Ursula von der Leyen called the tariffs a 鈥渕ajor blow to the world economy鈥� and warned countermeasures were being prepared, but that Europe would seek to negotiate with the US.
However, this process will likely take time. And in the near term, the principle of the US imposing 鈥渞eciprocal鈥� tariffs could even mean that some tariff rates increase if other countries retaliate.

We expect this to result in a tariff- driven slowdown in global growth in the second and third quarter, including in the US. The Trump administration鈥檚 actions had already increased the US effective tariff rate from 2.5% to approximately 9.0%, the highest since World War II. The situation remains fluid. If the threatened sector-specific tariffs are also eventually applied, our initial estimates suggest that the effective tariff rate could rise as much as 15 percentage points to a level between 20% and 25%.

Even if tariffs are ultimately reduced by year-end, the immediate shock and associated uncertainty are likely to drive a near-term slowdown in the US economy and reduce full-year 2025 growth to closer to or below 1%. We would also expect the Federal Reserve to deliver 75-100bps of rate cuts over the remainder of 2025.

We note that heightened uncertainty alone has already been feeding through into weaker business and consumer sentiment. The ISM Manufacturing PMI fell to 49 in March from 50.3 in February, the first contraction in three months; consumer spending, which accounts for more than two-thirds of economic activity, rose by less than expected in February; and the Atlanta Fed鈥檚 GDPNow forecast for 1Q25 growth is currently running at -1.4% (adjusted for gold imports).

An upside scenario (20% probability) is that tariffs are reversed relatively quickly. Previously announced tariffs on Mexico and Canada in February were reversed in a matter of days following lobbying from businesses. As growth risks come into view, we could see more sustained pressure in Washington to find politically acceptable off-ramps from this policy approach. Nevertheless, in the near term, we think the political capital invested in 鈥淟iberation Day鈥� and the breadth of the announced tariffs make a wholesale reversal less likely on this occasion.

We also note that the tone of the Trump administration鈥檚 rhetoric on tariffs had shifted to be significantly more hawkish in recent weeks. At the beginning of March, President Trump said: 鈥淭here will be a little disturbance, but we鈥檙e OK with that... It won鈥檛 be much.鈥� On 30 March, in contrast, President Donald Trump said, 鈥淚 couldn鈥檛 care less if they raise prices, because people are going to start buying American cars.鈥� He also described the auto tariffs as 鈥減ermanent, 100 percent.鈥�

A downside scenario (30% probability) is that the tariffs announced on 2 April remain in place for more than three to six months or potentially increase with rounds of retaliation from trading partners. We believe this could lead to a US recession and even greater rate cuts from the Fed (about 300bps).

How to invest?

Equities

The shift to a more aggressive tariff scenario over the past week has contributed to higher volatility in equity markets.

Market uncertainty is likely to remain elevated in the weeks ahead, as investors consider likely downgrades to consensus US economic and earnings growth forecasts, the risk of a tit-for-tat escalation in tariffs, and the potential scope for tariffs announced to be negotiated down. All of this is likely to mean an extended period of volatility for US equities.

Nonetheless, we do believe the market will end the year higher and continue to see strong long-term potential in our Transformational Innovation Opportunities鈥斅�Artificial intelligence,听Longevity, and聽Power and resources鈥攚hich could get caught up in near-term derisking. Investors can also consider utilizing yield-generating strategies to benefit from current high levels of volatility.

While uncertainty is currently high, we also believe that, at the margin, incremental news flow could become more supportive as we approach the second half of the year. Now that the tariffs have been announced, negotiations to soften them can begin. Tariff revenue could be used to offset the cost of extending tax cuts. And we would expect the Fed to respond to weakening growth with interest rate cuts.

The announced tariffs will have a negative impact on Europe and China, and after year-to-date rallies in their markets, a period of near-term derisking is possible, particularly if retaliatory measures are announced. We hold a Neutral stance on both markets. For now, we recommend selectivity. In Europe, we favor beneficiaries of increased fiscal spending and small- to mid-cap stocks. And in Asia, we like Taiwan for its structural growth market and recommend defensive strategies centered on mainland China's state-owned enterprises.

Fixed income

\We believe that high-quality fixed income represents an attractive portfolio diversifier. Bond yields have remained relatively high in recent weeks, in spite of recent volatility and concerns about growth. We believe this creates an opportunity for investors to seek durable portfolio income and optimize cash returns.

Although the Fed is facing a challenging position, with growth likely to fall and inflation likely to rise because of the announced tariffs, we believe that evidence of labor market weakness would provoke faster Fed rate cuts. Fears that announced tariffs could prove long-lived may also contribute to lower long-term Fed rate expectations and prove supportive for quality bonds.

High grade and investment grade bonds offer attractive risk-reward, in our view, and we also like diversified fixed income strategies (including senior loans and private credit) and equity income strategies.

Currencies and commodities

We believe that investors can benefit from currency volatility by trading the range in EURUSD, USDCHF, and GBPUSD. In isolation, tariffs are dollar positive, and the US dollar has also traditionally rallied during risk-off periods. However, we believe this effect is likely to be offset by potentially sharper downgrades to US growth and rate expectations than in other regions, as well as potential increases in diversification flows away from dollar assets because of the political uncertainty.

We note that longer-term weakness in the USD could arise if downside risks to the growth outlook are accompanied by sharper-than-expected Fed rate cuts.

Meanwhile, we expect gold will continue serving as a hedge against geopolitical and inflation risks. The gold price has risen sharply, and we hold a year-end target of USD 3,200/oz. We would not rule out even higher prices than this level if tariffs are sustained.