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As we progress through 2025, the global economy finds itself navigating through heavy swells stirred up by the Trump Tariff Tsunami. United States (US) President Donald Trump has truly turned global trade, logistical supply chains and foreign policy upside-down.
The current situation has many similarities to the sudden-stop scenario brought on by the COVID-19 pandemic and hence the risk of severe economic disruption, and slowdown, has increased dramatically. Financial markets have responded with increased volatility and global trade flows are showing early signs of contraction. Investors are rightly cautious as these developments will continue to ripple across equities, currencies, and commodities in the months ahead.
At Peregrine Wealth, we resist the temptation to make kneejerk changes to our medium term macro-economic assumptions purely because so much of what lies ahead is unknown. The short term will be volatile, but the world always finds a new equilibrium after every shock. So too, this shall pass. It’s obvious that the heightened uncertainty will lead to lower growth and the tariffs will be inflationary, but that’s where the ‘obvious’ ends.
In addition to Trump’s tariffs, there are other important trends that will further impact markets.
Persistent inflation challenges
Inflation remains stubbornly high despite earlier expectations of moderation. Elevated input costs from tariffs and supply bottlenecks are now embedding themselves deeper into pricing structures. Central banks are finding it harder to justify rate cuts, keeping financial conditions tighter for longer. Interest rate expectations have rapidly been adjusted higher, and cuts have been priced out in the near term.
Geopolitical flashpoints remain
The Russia-Ukraine conflict drags on without a resolution, whilst a tentative ceasefire between Hamas and Israel, coupled with the release of hostages, provided only temporary respite from hostilities in Gaza. Geopolitical risk remains a persistent undertone in the markets, particularly influencing commodities and energy prices.
Navigating forward with confidence
At Peregrine Wealth, we continue to trust in our long-term, multi-scenario investment approach. By preparing portfolios to weather a wide range of outcomes, we ensure that our clients are not only protected against volatility but also positioned to seize emerging opportunities. Through the turbulence of 2025, we remain unemotionally dedicated to our investment process. This keeps us focused on the longer term in respect to economic outcomes and on valuation-based opportunities amidst the volatility.
Enjoy this edition of PEREGRINATION.