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Here we go again. Feels a lot like 2008 and the all too recent 2022 again when markets came tumbling down, both for different reasons. And today an entirely new reason, although as with 2022, caused by the action of politicians.

So, what do we think will happen next? There are three possible scenarios according to Ken Fisher the billionaire investment manager based in the US.

• Trade partners will compromise. Most countries have been willing to negotiate. I believe this the most likely scenario and one Trump has been banking on.

• Congress will block tariffs on the basis they are unconstitutional.

• Countries react with hostility and reciprocal tariffs which gets us nowhere.

No one wins by hiking up tariffs.  If every country gets to a point that they are all charging each other 25%, they may as well charge nothing at all. In other words, free trade remains the best economic solution for all. Trump is a disrupter and a hardnosed negotiator. His tactics don’t make him popular, but he has banished complacency. He won’t want the US to go into recession, so we just need to sit tight and let this play out.

Markets will remain volatile and short-term holders of passive funds will no doubt sell up and take a loss, causing more volatility. At some point those with a long-term perspective will realise they can buy great companies at a discount today.

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Commentary from James Scott-Hopkins, Founder, EXE Capital Management

The views are those of the author only. The above does not constitute a recommendation to buy or sell and advice should be sought from your financial advisor as to the appropriateness of any actions. The value of investments can fall as well as rise. Past performance is no guarantee of future returns.

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