The US government aims to protect domestic industries from foreign competition by imposing import tariffs averaging around 22%. These tariffs, which turned out to be higher than expected, have led to the third-largest 3-day fall in share prices since 1945. This anticipates a significant slowdown in the economy, though it doesn’t yet mean that there will be a recession. American consumers, however, will object in the medium term to prices rising as a result of the tariffs.

We therefore expect the tariffs will be revised, at least in part. At company level, we are likely to see supply bottlenecks, declines in sales and margin erosion. Assets that are currently stabilising include in particular government bonds, safe-haven currencies such as the CHF and the JPY, and Swiss real estate. Generally speaking, we anticipate a further rotation away from growth sectors (such as IT and communications) to value sectors (such as utilities, consumer staples), and away from the USA towards regions with significant domestic consumption, such as emerging economies.

We expect a political signal in the next few days to at least calm the equity markets. This could also come from the US Federal Reserve. It is important to emphasise that it is not a good idea to rush into making decisions after these kinds of market corrections.