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1 What Trump's Trade War Means for YOUR Investments

It's been another 'Manic Monday' for savers and financiers.

Having awakened at the start of recently to the game-changing news that an unidentified Chinese start-up had developed a low-cost expert system (AI) chatbot, they found out over the weekend that Donald Trump truly was going to perform his hazard of introducing a full-blown trade war.

The US President's choice to slap a 25 per cent tariff on items imported from Canada and Mexico, and a ten per cent tax on deliveries from China, sent out stock markets into another tailspin, just as they were recovering from last week's rout.

But whereas that sell-off was mainly restricted to AI and other technology stocks, this time the effects of a potentially lengthy trade war might be a lot more damaging and extensive, and perhaps plunge the global economy - including the UK - into a downturn.

And the choice to delay the tariffs on Mexico for one month offered just partial break on international markets.

So how should British financiers play this extremely unpredictable and unpredictable scenario? What are the sectors and assets to avoid, and who or what might become winners?

In its simplest type, a tariff is a tax enforced by one nation on items imported from another.

Crucially, the task is not paid by the foreign company exporting however by the getting company, which pays the levy to its government, supplying it with beneficial tax earnings.

President Donald Trump talking with reporters in Washington today after Air Force One touched down at Joint Base Andrews

These might be worth up to $250billion a year, or 0.8 per cent of US GDP, according to experts at Capital Economics.

Canada, Mexico and China together represent $1.3 trillion - or 42 percent - of the $3.1 trillion of goods imported into the US in 2023.

Most economic experts dislike tariffs, mainly due to the fact that they trigger inflation when companies hand down their increased import costs to consumers, sending out prices higher.

But Mr Trump enjoys them - he has explained tariff as 'the most beautiful word in the dictionary'.

In his current election campaign, Mr Trump made no trick of his strategy to enforce import taxes on neighbouring nations unless they curbed the prohibited flow of drugs and migrants into the US.

Next in Mr Trump's sights is the European Union, where he's said tariffs will 'certainly happen' - and possibly the UK.

The US President says Britain is 'method out of line' however an offer 'can be worked out'.

Nobody must be amazed the US President has chosen to shoot very first and ask questions later on.

Trade sensitive companies in Europe were likewise hit by Mr Trump's tariffs, including German carmakers Volkswagen and BMW

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