Understanding the new US tariffs: What Trump’s ‘Liberation Day’ means for investors
In a Hurry? Here Are 5 Things You Should Know:
The US introduced sweeping new tariffs under the label “Liberation Day,” targeting countries with large trade surpluses with the US.
Markets dropped up to 5% globally, but it’s important to view this in the context of much larger gains over the last decade.
This is part of a broader US strategy to reset trade terms, curb its fiscal deficit, and potentially create a sovereign wealth fund.
Your portfolio remains diversified, with both active and passive strategies reviewing implications and repositioning where needed.
This isn’t the time to panic – markets are adjusting, and long-term fundamentals remain the most important driver of returns.
TL;DR – Why This Matters (and Why You’re Still on Track)
Global markets took a hit after US President Donald Trump announced sweeping tariffs, under the banner of “Liberation Day.” While headlines described billions being “wiped” from markets, it’s worth noting the S&P 500, even after the drop, is still up over 18% from levels just three years ago.
Short-term volatility can feel uncomfortable. But market shocks are part of the investment journey - and your portfolio is built with that in mind. This blog explores what’s happening, what it means, and how we’re responding on your behalf.
What Happened?
On April 2, President Trump declared a national emergency and signed an executive order introducing:
A 10% baseline tariff on most imported goods entering the US, and
“Reciprocal tariffs”—targeted charges on countries that run large trade surpluses with the US, including China, Japan, and several European nations.
These actions were framed as correcting trade imbalances and reclaiming economic sovereignty. But the implications extend beyond simple tariff policy.
The Bigger Picture: A Rewriting of Global Trade and Finance
The new tariffs appear to be part of a broader strategy to reform the US government’s finances and reset its position within the global economic system. This emerging policy agenda aims to:
Rebuild American manufacturing,
Reduce the US’s reliance on global supply chains,
Restructure defence arrangements with international allies,
Contain the growing US fiscal deficit, and
Explore the creation of a US sovereign wealth fund.
This reflects bold, nationalistic thinking aimed at shifting the global economic balance. Trump’s advisers argue that allies and trading partners should contribute more toward market access and defence support.
Why Did Markets Drop?
Markets have been volatile for much of the period since Trump’s inauguration. In the very short period following the tariff announcement, the response from markets has been:
US and global equities fell up to 5% on the day following the announcement,
Gold prices continued to be supported, reflecting demand for safe haven assets,
Bond yields fell, improving bond values as investors moved into defensives.
This reaction reflects growing investor concern around:
Higher input costs and supply disruptions,
A potential reacceleration in inflation, and
A more fragmented and politically volatile global economy.
What This Means for Investors
While headlines focused on “trillions wiped from markets,” consider this:
The S&P 500, even after this week’s fall, is still up around 10% annually (or around 64%) since 2020.
Australian equities had reset record highs earlier this year.
Further short-term impacts may include:
Higher volatility in equity and currency markets,
Pressure on company profit margins, especially those reliant on imports and supply chains from around the world, and
Heightened policy and geopolitical risk, which could challenge traditional assumptions around trade, inflation, and growth.
But this isn’t a reason to panic. The world simply is adjusting to a more fragmented trading environment. For investors, it reinforces the need for diversification, not just across asset classes, but across geographies and currencies as well.
Our Approach: Staying Diversified and Disciplined
We’re not reacting impulsively. Your portfolio is built to manage uncertainty and aligned to your long-term goals. That means:
Diversification across assets classes, sectors and regions,
Avoiding overexposure to any single country, policy or outcome,
Focusing on fundamentals, not just headlines.
Importantly, we use a blend of active and passive strategies. We, alongside our active managers, are assessing how these policy shifts affect different assets. Where appropriate, portfolios will be adjusted to mitigate risk and pursue emerging opportunities.
Bonds continue to play a vital role too, particularly in the defensive part of portfolios. As volatility hits equities, bond yields typically fall, which increases their value and provides a cushion during market downturns like this.
Looking ahead: focus on what matters
“Liberation Day” may be a turning point in how nations negotiate trade and assert economic power. Whether it leads to successful rebalancing or greater fragmentation remains to be seen.
But for investors, here’s what hasn’t changed:
Businesses will keep operating, selling goods and services.
Governments will still borrow and build.
People will still need homes, transport, technology and energy.
These are the fundamentals that drive long-term investment returns.
Being invested in quality assets, with proper diversification, remains the best approach to participate in long-term outcomes from investing. Reacting emotionally to headlines is rarely in an investor’s best interests and can be the quickest way to derail a well-considered investment plan.
So, we stay the course: informed, diversified, and anchored to your goals.
And we’ll continue to keep you updated as this story unfolds.
If you have any questions about your investment portfolio, please contact your FMD Adviser.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.