As Trump's tariffs rock the world, what are the safe bets for Aussie investors?

Trump’s tariffs spark global trade chaos and market panic
Gold and utilities set to shine as investors brace for recession
But certain Aussie miners face pressure as China feels the pinch

“Liberation Day” finally came, and it’s brought the big bang the markets have been dreading.

Trump has just slapped new tariffs on imports from around the world, and it’s a full-on assault on global trade.

A 10% baseline tariff on all imports to the US is the headline, but some countries are getting hit harder.

China’s looking at 54%, with the 34% new rate added to the existing 20% on all Chinese goods. The EU’s copping 20%, and Vietnam’s getting smashed with 46%.

Trump is calling it payback for years of “unfair” trade deals, and his plan is to boost US manufacturing and give the economy a jump-start.

Naturally, markets were rattled.

Shares around the world slumped on Wednesday and Thursday, with automakers, energy and tech stocks feeling the heat.

For investors, the reality is that this could trigger potential inflation spikes, and a possible reshuffle of global alliances.

“It’s fair to say the raft of reciprocal tariffs announced by US President Trump was at the worst-case end of likely scenarios,” said David Bassanese, chief economist at Betashares.

“The early verdict of markets is that they’re likely to Make America Poorer Again, with S&P 500 futures down 3.6% post-announcement.”

The good news, though, is the across-the-board tariff increase was only 10% rather than the 20% some market rumours had suggested.

But, as Bassanese noted: “Major US trading partners China and the European Union have been slugged with large tariff increases, and both are likely to retaliate against the United States.”

And that could quickly escalate into an extremely dangerous tit-for-tat trade war.

“It will hurt US economic growth to the extent that higher prices, or lower corporate profits if business absorbs some of the tariff increases, dent real household incomes and corporate profitability.”

Bassanese estimated that US growth could drop by 1% over the next year.

Potential silver lining?

As for Australia, we’ve dodged some of the worst of it, but there’s still a 10% tariff that all countries with low barriers to US exports will face.

“For Australia, the main impact of Trump’s new set of tariffs will be indirect – specifically the likely negative impact on global economic growth and that of China especially,” Bassanese pointed out.

But China’s exposure to US trade has declined recently, and as a result, Bassanese believes that Chinese economic growth will hold up.

There is another potential silver lining, too.

If Trump uses these tariffs as a way to negotiate lower global trade barriers, it could ultimately benefit global growth.

Looking ahead, however, Bassanese thinks these tariffs have increased the risk of a global recession.

“Much will turn on whether Wednesday’s announcements represent the end of global trade uncertainty, or just the beginning.”

Gold to shine even brighter

With a global recession potentially looming, investors might want to brace themselves for a bumpy ride, but one expert says gold is the one asset to watch.

Jessica Amir, a market strategist at trading platform Moomoo, sees gold stocks as the biggest beneficiary of the ongoing market turbulence, pointing out that uncertainty has driven gold to new highs.

“I literally think it’s not a matter of if gold will get to US$3500, but a matter of when… and that will benefit the stock or the sector on the ASX,” she said.

“So the only sure winner of uncertainty is gold, specifically gold miners.”

With gold prices continuing to break records, reaching US$3152 an ounce at time of writing, Amir believes the momentum in the gold mining sector will continue.

“The stocks on the ASX that are benefiting from this have actually cushioned the blow for the Aussie share market.

“So the market is telling us where it believes will be the best performers going forward, and they’re in gold.”

“Gold miners are doing exceptionally well. These stocks have been up in high double digits, and I believe these gains will continue.”

But it’s not just gold that Amir’s focusing on.

Utilities – which share similarities with telecoms — also stand out as a safe haven.

“Regardless of a potential recession, people are going to keep using energy, and those companies are going to be able to sustain earnings,” Amir explained.

“So utilities are definitely a sector to watch.”

The start of a major correction?

However, Amir noted that global ripple effects of these new US tariffs could be particularly painful for some Australian miners, especially those heavily reliant on exports to China.

The fiscal strain on China could ultimately reduce demand for key Australian commodities.

“Iron ore, aluminium, and copper prices are already being squeezed down.”

Indeed, some of the country’s largest miners, like BHP (ASX:BHP) and Rio Tinto (ASX:RIO), have already been impacted, with stocks down over 10-15% year-over-year.

Amir also sees this as the beginning of a broader market correction.

“I think, unfortunately, that the fact that we’ve completely erased the gains the US market has made in recent weeks suggests investors are bracing for a recession,” she said.

“The US market and the Australian share market corrected twice before falling into a bear market during Trump’s first trade war in 2018-2019.”

Amir is calling for a potential pullback of 20% in global equity markets, driven by rising costs and falling earnings.

“The ASX isn’t as exposed as the US market, but gold stocks, utilities, and some industrials are likely to weather the storm better than most other sectors.”

The views, information, or opinions expressed in this article are solely those of the interviewees and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.