It was all over my feed this weekend; the stock market has plunged into chaos, I read.
I understood the turbulence had something to do with Donald Trump, who has imposed tariffs on goods imported to America.
But I’ll be honest; I don’t know much about the stock market, I don’t invest, and I’m not entirely sure how the tariffs will affect me (look, there’s a reason I’m not a finance journalist).
I’d be embarrassed by that if I were alone, but loads of my friends and family members are expressing the same sentiment.
So, I thought I’d take my clueless self to private equity specialist and founder of Grant Ventures, Ben Grant, and ask him to explain what’s going on.
And I thought I’d seek some advice for the average UK investor or saver, too.
“The recent stock market wobble has a lot to do with new tariffs announced by Donald Trump”
Grant told us that a lot of the instability seems to be down to Trump’s tariffs “and the uncertainty surrounding what they mean for businesses around the world.”
“In simple terms, tariffs are taxes on things that come into a country from abroad,” he added.
“Trump’s plan is to put new tariffs on goods from places like China, Mexico, and the EU. This means that it will be more expensive to buy certain products, which can either slow down trade, hurt profits for companies, or make everyday goods more expensive for people.”
That poses a problem for investors, Grant says, because people hedging their bets on certain stocks’ performance “don’t like surprises.”
“And they really don’t like anything that threatens their money,” the expert continued.
“So when Trump’s tariffs were announced, it made everyone start to panic. People started worrying that companies would earn less money, or that we could be heading for a slowdown, which is why the markets dropped.”
What does that mean for me?
You might think that wouldn’t affect us in the UK, but Grant explained that “our financial system is tightly connected to the US.”
“If big companies start struggling or global confidence takes a hit, it can affect everything from your pension pot to the value of the pound,” he added.
“We’ve already seen certain UK-listed companies with global exposure take a hit because of fears around supply chains and trade flows.”
Still, he says, that doesn’t mean “much” for the average saver or investor “in the short term if you’re in it for the long haul.”
“Market drops feel dramatic in the headlines, but they’re a normal part of investing,” he advised.
“The best approach is usually to stay calm, avoid knee-jerk reactions, and remember that markets often recover once the dust settles.”
Tl;dr: “Trump’s tariffs have spooked the markets because they make doing business more expensive and less predictable. But for most people, this is a storm to ride out, not a reason to abandon ship,” the pro summarised.