April 2025 Insights
AW constantly monitors the investment markets and aims to keep our valued clients regularly informed and updated. We aim to help investors cut through all the media noise and hype and understand what is really driving investment markets and portfolio returns.
In this edition, we cover:
Trump’s latest tariff announcements
Coffee-flation
"Liberation Day"
This morning, President Trump announced a minimum 10% tariff on all imports to the United States regardless of origin and including from Australia. Approximately 60 nations were singled out for higher “reciprocal” rates. This announcement outlined generally higher-than-anticipated tariffs and there were no specific company or sector exclusions. It is far from clear how these tariffs will operate in practice; whether they will be cumulative or stacked, and how they will apply to complex goods manufactured in several countries. Many countries including the European Union have already reiterated an intention to retaliate so further volatility seems likely.
An optimistic take would be that these announcements represent the US opening bid in trade negotiations which will ultimately see lower rates applied. Alternatively, high tariffs could remain in place to raise revenue and support a long-term plan to broaden and strengthen the US manufacturing base. However, it seems unlikely that these plans will raise enough revenue to offset tax cuts. Moreover, any increase in manufacturing could be more than offset by a reduction in US exports in financial and business services, entertainment, defence and technology, to name a few.
In the short term, the measures represent a significant increase in trade barriers between the US and the rest of the world. US consumers will now pay additional taxes on imports regardless of the origin. In contrast, the rest of the world is still on a path to lower trade barriers between nations.
The best case: Trump softens his stance under pressure and negotiates, markets then recover into year-end, helped by rate cuts, tax reform, deregulation, and the continued AI boom. The worst case is a global recession, which would mean shares decline further over the course of 2025. For now, the key message is to stay diversified, hold quality assets and keep cash on hand to seize buying opportunities if markets fall.
Coffee-flation
Have you ever wondered why the price of your coffee has gone higher over recent years?
Well, that’s because the price of coffee beans has soared to record levels due to bad weather conditions in Brazil and Vietnam.
Any advice contained in this insight/update is general advice only and does not take into consideration the reader’s personal circumstances. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances. When considering a financial product please consider the Product Disclosure Statement. Aspirations Wealth Group is a Corporate Authorised Representative of Aspirations Private Wealth Pty Limited. ABN 57 622 182 076 – AFSL 503889.