Tariffs 2025 – implications for active equity investors

Market background
Perspective from previous periods of market turbulence
What are the implications for active managers?
Reaction from investment managers
The consensus across our investment managers is that the introduction of tariffs on so-called “Liberation Day” has introduced significant uncertainty — and markets tend not to like uncertainty. Managers also note that the fall in equity markets has been relatively broad-based.
For most of our managers, it is too early to understand where we land on tariffs and the impact to global growth, corporate earnings, equity valuation multiples and whether we are ultimately pushed into a global recession.
Conclusion
There are two key themes that have dominated equity markets in the early part of 2025. The initial unwinding of the long US mega-cap growth/tech trade in Q1 2025, and the introduction of widespread tariffs by the US Administration on “Liberation Day” 2 April 2025. Both have driven stock markets lower, which has caused understandable consternation for investors.
While discerning the likely direction of markets in the near term is all but impossible, history suggests that any large drawdown in equity markets is typically followed by a recovery. Periods of market dislocation may also present opportunities for disciplined investors to add value, particularly in an environment where leadership is more broad-based and less concentrated in specific areas.
Ultimately though, we believe successful navigation of the ups and downs of equity markets, including this difficult period, requires a robust framework for constructing equity portfolios, which is aligned with specific investor objectives and constraints. In highly volatile markets, we are of the view that it is especially important to exercise discipline in sticking to these pre-agreed frameworks.
Tariffs 2025 – implications for active equity investors
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