Simon Edelsten quoted in Portfolio Adviser’s ‘UK ‘least affected’ but tariffs paint ‘depressing’ picture for people and markets’

Simon Edelsten, CIO of Goshawk Asset Management said that its hard to tell exactly what the knock-on effects of ‘Liberation Day’ will be, beyond “depressing for markets and people”.

“The details are still vague; the maths behind it unfathomable. On the face of it the UK has got off lightly, but cars made in the UK will probably be sold into Europe rather than the USA. The next largest UK export to the US is pharmaceuticals.

“No-one is sure from Trump’s ramble whether the tariffs cover all pharmaceuticals. A US citizen taking a drug made by, say, Glaxo, is unlikely to switch to a cheaper medication, so will just have to pay the higher price.

“Countries facing much higher tariffs will look to sell goods once intended for the US to other markets, including the UK. While this can make things cheap for consumers here, it may also undermine the profitability of domestic manufacturers.”

He added: “For UK investors, ‘tin hat’ stocks such as property shares and insurance companies have the resilience to cope with these changes. Economically sensitive sectors such as banks and commodity stocks may not cope so well.

“After the Spring Statement many commentators noted how little ‘wriggle room’ the UK Chancellor has in her budget. The UK tariffs are lower which is good, also gilt yields have fallen – which makes UK debt interest lower, which is good but also reflects lower growth prospects which is bad!

“Overall, for businesses and for chancellors and US consumers there is nothing good (or even coherent) about these tariffs.”

 

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