On 9 July, President Trump’s 90-day tariff suspension is set to expire. What will this mean for investors?

Equity markets welcomed the truce with relief, prompting an immediate rebound. Yet, despite lingering uncertainty surrounding the outcome of this pause, several trends are starting to take shape amid expectations of economic softness in the third quarter. So far, early first-quarter earnings from US companies have been broadly satisfactory, although their forward guidance remains cautious.

US economy on the cusp of a decisive pivot

For now, trade tensions have already cast a shadow over growth and stirred inflation expectations. However, the true macroeconomic inflection point is expected in the third quarter. Should tariffs be reinstated in July, the shock would be substantial: an inversion in the growth trajectory and the first price pressures are likely to materialise by September.

On the household side, sentiment, purchasing power, and the wealth effect continue to deteriorate, while a rise in unemployment is expected in the second half of the year. These factors are likely to weigh on consumption – which has remained resilient so far – without necessarily triggering a sharp contraction. Meanwhile, corporates are grappling with a lack of visibility, dampening both investment and reshoring efforts.

A full implementation of the planned tariff hikes, along with retaliatory measures, could drive both headline and core inflation above 4% year-on-year. However, in recent months, energy and core goods prices have continued their declining trend. To keep headline inflation below the 4% threshold amid escalating trade tensions, a sustained drop in oil prices towards USD 40–55 per barrel would be necessary.

Overall, the outlook for 2025 remains clouded by uncertainty. Growth is projected between 1 and 1.5%, with a trough expected in the third quarter. At the same time, the Federal Reserve’s room for manoeuvre, as it navigates the delicate balance between price stability and economic growth, appears more constrained than markets currently anticipate. Even so, a slight rebound in activity could materialise in the final quarter, supported by fiscal easing.

Despite the uncertain economic outlook, glimmers of hope have begun to emerge. The US administration is sending positive signals, notably with its a more conciliatory stance towards China. Ongoing trade negotiations with other partners, including India and Japan, might also help to contain the fallouts of trade tensions. These developments could resonate in Europe and Switzerland, paving the way for a broader easing of tariff conflicts and helping to relieve pressure on companies in the countries concerned.

Positioning portfolios in an environment of growing uncertainty

At time of writing, early first-quarter earnings results from US companies have been broadly satisfactory, although their forward guidance remains markedly cautious, as expected. The pullback of the dollar and front-loading – the rush to import goods before the new tariffs take effect – could partly explain some better-than-expected performances. Still, the exceptional nature of the front-loading suggests a likely deceleration in the second quarter.

The rotation of capital flows away from the US, which includes American investors, has supported the relative outperformance of European and emerging markets. The earnings results from the major US tech giants, which have long underpinned the dominance of US equities, will be crucial in shaping the next phase of this trend.

In this wait-and-see environment, we are protecting against US dollar weakness by maintaining a strong conviction in gold, with a price target of USD 4,000 per ounce by early 2026.


The opinions expressed herein are correct as at 2 May 2025 and are subject to change without notice. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.