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U.S. trade policy concerns lead to market volatility

13 May, 2025
clock 7 MIN READ

Global equities, as measured by the MSCI ACWI Index, saw a modest overall upturn in April. However, there was disparate performance among markets due to a slump in the U.S. market amid volatility in response to numerous changes in the trade policies of the administration of President Donald Trump. Emerging markets underperformed developed markets, with the notable exception of the U.S. As measured by the MSCI USA Index, U.S. stocks posted modestly negative returns and significantly lagged their European and Asian counterparts, as represented by the MSCI Europe Index and the MSCI Pacific Index, respectively.

Global equities, as measured by the MSCI ACWI Index, saw a modest overall upturn in April. However, there was disparate performance among markets due to a slump in the U.S. market amid volatility in response to numerous changes in the trade policies of the administration of President Donald Trump. Emerging markets underperformed developed markets, with the notable exception of the U.S. As measured by the MSCI USA Index, U.S. stocks posted modestly negative returns and significantly lagged their European and Asian counterparts, as represented by the MSCI Europe Index and the MSCI Pacific Index, respectively.

On April 2, the Trump administration announced a blanket minimum tariff of 10% for all imports, and imposed so-called reciprocal tariffs on multiple countries (with the exception of goods from Canada and Mexico covered under the U.S.-Mexico-Canada Agreement). However, shortly thereafter, Trump announced a 90-day suspension of these reciprocal tariffs, with exception of China. The action followed a brief period of significant volatility in the U.S. Treasury market. The yield on the 10-year U.S. Treasury note rose sharply on fears that the tariffs could have a negative impact on the economy and reignite inflation. Bond prices and yields move inversely. The yield subsequently retreated after the announcement of the tariff suspension.

Later in the month, investors were encouraged after Treasury Secretary Scott Bessent told attendees at a private investor summit that he believes the trade war with China is unsustainable and that both countries need to alleviate the geopolitical tensions between the world’s two largest economies. Additionally, Trump indicated that he was considering a reduction of the 145% tariffs on Chinese imports. “It won’t be that high,” he noted. “It will come down substantially. But it won’t be zero. It used to be zero.” The ongoing tariff dispute remains highly volatile and in constant flux.

1 All equity market performance statements are based on the MSCI ACWI Index.
2 According to the U.S. Department of the Treasury. As of April 30, 2025. 
3 Source: “Trump says US will ‘pass’ on Ukraine peace talks if no progress soon.” BBC. April 25, 2025. 
4 Source: “Putin announces May 8-10 ceasefire, Ukraine wants truce now.” Reuters. April 28, 2025.

All references to performance are in US dollar terms unless otherwise noted. See Standardised Performance for more information. 

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Glossary of financial terms 

  • Yield is the income returned on an investment, such as the interest received from holding a security. The yield is usually expressed as an annual percentage rate based on the investment’s cost, current market value, or face value.
  • Yield curve represents differences in yields across a range of maturities of bonds of the same issuer or credit rating (are (which is used to assess the risk of default of companies or countries). A steeper yield curve represents a greater difference between the yields. A flatter curve indicates that short- and long-term yields are closer together.
  • Monetary policy refers to decisions by central banks to influence the amount of money and credit in the economy by managing the level of benchmark interest rates and the purchase or sale of securities. Central banks typically make policy decisions based on their mandates to target specific levels or ranges for inflation and employment

Important Information 

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Positioning and holdings are subject to change. All information as of the date indicated. 

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