- On April 2, President Trump introduced his “reciprocal tariff liberation day”.
- The US will impose 25% tariffs on cars, car parts, steel and aluminum. In addition, tariffs will be imposed on all goods from 90 countries including China (34%), the EU (20%), the UK (10%) and Japan (20%).
- According to President Trump, these tariffs will lead to a golden age for the US. In practice, it will lead to higher inflation and lower growth worldwide.
- According to the Atlanta FED, the US economy shrank by -1.0% (QoQ) in 2025Q1. If we adjust for the large amount of gold that was imported, the US economy still shrinks by -0.35% (QoQ).
- Eight of the 16 US recessions since 1926 have occurred in the first year after the election.
- Commodities such as Copper, Gold and Silver were the star performers in 25Q1.
- The S&P 500 underperformed non-US stocks by nearly 10%, the biggest underperformance since 2009.
- Given the trade war just declared by President Trump, the risks seem to be mainly downward for the time being. Gold and Cash seem to be King again.
Investors and economists already saw it as the biggest risk to economic growth, inflation and asset prices. Consumer confidence in the US has also fallen to a level that is normally only seen in the run-up to a recession. On April 2, it happened, President Trump introduced his “reciprocal tariff liberation day”. The US will impose import tariffs of 25% on cars, car parts, steel and aluminum. In addition, import tariffs will be levied on all goods from 90 countries, including China (34%), the EU (20%), the UK (10%) and Japan (20%). On average, the tariffs will be a percentage higher than feared and higher than in the 1930s. According to President Trump, these tariffs will lead to a golden age for the US. In practice, it will lead to higher inflation and lower economic growth worldwide. According to calculations by Statista, the US itself is one of the biggest losers in a trade war. The announced import tariffs will come into effect on April 9, 2025.
In the run-up to the import tariffs announced by President Trump, American companies have started to import goods and services en masse before the import tariffs take effect. According to the Atlanta FED, the US economy shrank by -1.0% (QoQ) in the first quarter of 2025. If we adjust this figure for the large amount of gold that was quickly imported, the US economy still shrank by -0.35% (QoQ). It would be an unprecedentedly bad start for a President whose motto is “Make America Great Again”. As a result of the import tariffs, the chance of a recession in the US in 2025 is increasing rapidly, which is in line with a tradition. Eight of the 16 recessions in the US since 1926 occurred in the first year after the election.
Commodities such as Copper (+25%), Gold (+19%) and Silver (+18%) were the star performers in 2025Q1. In addition, the stock markets in Italy, Germany and Hong Kong (+17%) showed a surprisingly good performance. In contrast, the S&P 500 and the Nikkei (-5%) both fell significantly. From its peak in February, the S&P 500 has now (April 3) fallen more than 10%, which is the 24th time since 1980. The S&P 500 underperformed non-US stocks by almost 10%, the largest underperformance since 2009.
The strong performance of European equities was not accompanied by a strong increase in corporate profits. It was only the price/earnings ratio that rose after European equities had underperformed for so long and because investors had positive future expectations as a result of the end to the “Schuldenbremse” in Germany and the “ReArm Europe” plan of the EU. Despite this positive sentiment, the prices of European equities going forward will also be determined for the time being by the trade war that the US has just started.
Goldman Sachs sees the S&P 500 falling further to 5,300 in the coming months, but reaching a level of 5,900 in 12 months. Goldman Sachs sees corporate profits rising further in both 2025 (+3%) and 2026 (+6%). However, given the trade war just started by President Trump, the risks in this scenario seem to be mainly downward. For the time being, Gold and Cash seem to be King again.
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