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After the volatility we saw in April driven by US President Trump’s “Liberation Day” tariffs, equity markets recovered across the board as trade tensions began to ease. We also saw improving consumer sentiment and robust corporate earnings which all helped drive positive equity market returns.

The US equity market was the best performing region in May, delivering +5.5%, which was underpinned by a strong Q1 earnings season. Of the companies that reported, 77% exceeded earnings expectations. The euphoria was felt across the market cap spectrum, as small cap stocks rebounded buoyed by proposed tax cuts and potential regulatory changes…

The entirely predictable bust-up between the world’s most powerful man and the richest, finally happened in very public fashion on Thursday. Upset about Trump’s “big, beautiful” tax and spending bill and the $2.4tn it would add to US debt, Musk called for Trump to be impeached, claimed the Epstein files weren’t being released because Trump features in them, and suggested starting a new political party “that actually represents the 80% in the middle”.

Trump responded by threatening to tear up Musk’s US government contracts…

On Wednesday, the New York based US Court of International trade ruled that Trump did not have the authority to impose the vast majority of his global tariffs. Major trade changes, like tariffs, normally need congressional approval but so far Trump has been bypassing that by invoking the International Emergency Powers Act of 1977. The bipartisan three-judge panel ruled that the act did not give him the power to impose his import taxes. However, by Thursday evening, a federal court put a temporary hold on the ruling allowing the tariffs to remain in place for now…

With it hard to catch a breath amidst constant change and the uncertainty surrounding Donald Trump’s on-paused-and-off-again-tariffs I want to take step back to consider the bigger picture.

For many, 2025 in the financial markets has so far been defined by Donald Trump’s economic policies. Now, however, may be the time to start thinking of his tariff strategy as being focused on deliberation rather than liberation. The recently deferred 50% tariffs placed on the EU could serve as a helpful case study to understand the use of tariffs to get people to the negotiating table.

Last week kicked off with the UK and the EU reaching a new agreement on post-Brexit relations. The deal will add an estimated extra £9bn to the UK economy.

According to Nick Thomas-Symonds, the UK’s chief negotiator. it marks “a new chapter in our relationship with the EU.” The major parts of the deal include:

There’s no denying that global markets are facing considerable uncertainty at the moment. Trump’s ‘Liberation Day’ on 2 April sent shockwaves across the world, and although ongoing negotiations have brought some relief, at the time of writing, the universal 10% tariff on imports to the US remains in place, along with additional country- and sector-specific measures.

In general, tariffs aren’t good for markets…