Investing amid the “Trump Tariffs”: Use history as your guide
Paul Mansfield · Posted on: April 17th 2025 · read
Recent “Trump tariffs” have been dominating world headlines and market commentary.
However, they are not the root of today’s volatility – they are a symptom of deeper, historical trends reshaping the global landscape.
By placing tariffs in the context of past economic, geopolitical, and societal shifts, like the protectionism of the 1930s, investors can gain greater insight into how to navigate the uncertainty.
"History teaches us that tariffs are a signal of broader forces, from debt burdens to power rivalries, and seeing them in this context can help investors avoid short-term traps and position portfolios for long-term success."
A signal to investors of changing global trends
U.S - China relations today reflect a geopolitical chess match, and tariffs have historically been seen to align with political divides that are fuelled by inequality - as seen in populist surges before World War II. The AI-driven tech boom meanwhile mirrors the Industrial Revolution’s upheaval, and the shift of wealth and influence.
Viewing tariffs as a symptom of these cycles and not the cause, keeps investors focused on the real drivers: debt crises, power transitions, and structural change.
This historical lens is invaluable because it curbs impulsive decisions. Tariffs might spark market dips but reacting to headlines risks missing the bigger picture: a world order evolving over decades.
"Investors who see tariffs as part of a pattern can prepare for the coming risks such as inflation from debt monetisation or geopolitical shocks."
For investors, this perspective shapes portfolio positioning in practical ways.
Tariffs should be considered in context
Economic fragility suggests hedging with assets like gold (it’s strength in recent times has not gone unnoticed) or Inflation-Protected Securities (e.g. Inflation-linked gilts or US TIPS) to counter rising prices. Commodities can benefit from supply chain disruptions and geopolitical tensions call for diversification beyond U.S.-China trade zones and exposure to equities in the UK or Europe.
When tariffs are seen in context - as markers of change, not drivers - investors can navigate uncertainty with confidence and build wealth through a transformative era, rather reacting to its symptoms.
Take a step back from politics and avoid reactionary measures
With great levels of uncertainty, it’s easy to take reactionary measures given the impact on the market, when divisive themes are being pushed politically. For younger investors who will have decades ahead until investments are required, it’s easier to be agnostic towards these kinds of levels of volatility. However, the considerations will be different for those close to, or in, retirement.
While selling out of the market should in most instances not be a consideration, given the likelihood of mistiming exit and re-entry, for these kinds of events, having an emergency fund of cash can allow for income from investments to be halted during downturns, as fixed withdrawals from funds have a greater impact on investments when values are down – a term referred to as “pound-cost-ravaging”. Using pension funds to purchase a guaranteed income with part of retirement funds is another way in which individuals can soften impacts of market downturns.
Taking different courses of action with hindsight is a luxury none of us have but, historically markets off the back of losses have also produced gains.
"Receiving professional financial advice will help you take a level of appropriate risk in line with your own views and capacity for loss."
Taking a step back from politics – business profits drive market returns and over the next few weeks and months, businesses will be re-evaluating their strategies and risks, in what will either be a new era with new trading partnerships formed with an element of de-globalisation, or a return to the status quo.
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Please contact a member of the MHA Wealth team for further guidance on your portfolio options, or to discuss your other investment and financial planning needs.
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