Some silver linings to the looming tariff cloud
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President Trump overturned the established world trading order with his so-called ‘Liberation Day’ tariffs.
Only rollercoaster fans will have enjoyed watching the ups and (mainly) downs in the market of the past week or so, writes Nick Williams, MRICS, Managing Partner. Perhaps the most important factor in building market confidence is certainty, and that is in short supply right now.
The targets for Trump’s tariffs, and their levels, are changing seemingly daily, and whilst the announcement last week of a 90 day pause with tariffs set at 10% for all countries except China give us a chance to draw breath, we still have no idea what will happen at the end of that period – or indeed whether the notoriously capricious President will change his mind once again in the meantime.
For investors, this has been a nervous time, and it’s not surprising that many are seeking a more stable home for their cash. And it is at times like these that commercial property investment can look like a good option.
The performance of commercial property is, of course, dependent on the wider economic outlook; you still need thriving businesses to create demand for offices, retail premises, industrial buildings and warehouses. But at least when you invest in commercial property you have a tangible asset, rather than a nebulous share certificate which could become worthless overnight.
And whilst some areas of the UK are likely to be harder hit by the tariffs (for example the West Midlands, where the automotive industry is a big employer), here in East Anglia where our economy is more dependent on sectors such as financial services and technology, the impact of tariffs will be less keenly felt – although any downturn of the wider economy will affect us all.
One predicted by-product of the turmoil is that we may well see interest rates coming down faster and more sharply than would otherwise be the case, and this too is good news for property investors, who, unlike speculators in stocks and shares, are often dependent on lending to finance their investments.
If the economic aggression from the US drives a faster and closer rapprochement with Europe, then that too would be a big win for the economy, and for our region in particular.
So this is not a cloud without silver linings, however much we might wish there was no cloud at all. Our region is resilient, and there is no reason to believe that we will see turmoil in the commercial property market such as we have seen in the financial markets in the past days and weeks. It is very much a case of ‘Keep Calm and Carry On’.
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