Monthly Outlook: Tariffs, Europe, Gold

Markets aren’t waiting around this April. Three key themes are grabbing the spotlight: Trump’s gearing up to reveal the next chapter of his tariff agenda, European equities are surging, and gold miners are topping the ASX charts. Let’s take a closer look.

Liberation Day

The next act in President Trump’s trade war saga is set for April 2, or Thursday morning, April 3 in Australia. Trump has labelled the date “Liberation Day” and it is expected to mark a sharp escalation in his administration’s trade offensive. Although key details remain unclear, it is anticipated that Trump will unveil a new round of tariffs targeting a broad range of trading partners. At the centre of the expected measures is the introduction of reciprocal tariffs. Under this policy, the United States would impose the same duties on imports that other countries apply to American exports. For instance, if a country places a 25% tariff on US goods, the United States will respond with an identical 25% tariff on imports from that country.

^{Image: Trump’s Tariff Timeline, CNBC}

Recent debates over tariffs have exposed deep divisions in economic philosophy and national priorities. From the anti-tariff perspective, free trade is seen by many as a powerful engine of global progress. It has expanded markets, driven innovation, reduced poverty, and significantly improved access to goods and services across borders. Tariffs risk reversing that momentum. They tend to raise prices, limit consumer choice, and disrupt supply chains. More critically, they can trigger retaliatory measures that escalate into trade wars, harming exporters and increasing costs for businesses. While protectionism may offer short-term relief, over time it is said to undermine competitiveness and isolate economies from global opportunities.

On the other hand, supporters of tariffs argue that free trade carries risks, and tariffs can help reduce them. A key concern is that, over time, free trade can make nations too reliant on foreign suppliers, especially for critical needs like energy, pharmaceuticals, and defence equipment. This dependence creates a potential national security vulnerability. The 2022 Nord Stream pipeline explosion underscored that vulnerability. While efficiency has its advantages, it can come at the cost of sovereignty. Globalisation has driven companies to offshore jobs in search of cheaper labour, hollowing out manufacturing in developed countries and often exploiting workers in developing ones. Tariffs could help reverse this trend by supporting the return of strategic manufacturing. Although this may significantly raise costs, it could be a necessary long-term investment. In a world of rising geopolitical tension and rapid advances in artificial intelligence, countries that focus on producing ideas rather than essential goods may find themselves increasingly vulnerable.

So, what can we infer is the Trump administration’s rationale for tariffs? Trump’s rhetoric, combined with recent interviews with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, paints a picture of the administration’s broader strategic intent. According to Bessent, the overarching plan for tariffs is to "reorder the international trading system and bring manufacturing jobs back to the US and reinvigorate the middle class." Tariffs are being positioned not only as a lever for industrial policy but also as a source of government revenue. The tariff strategy fits within a broader economic agenda. This includes Elon Musk’s cost-cutting efforts via DOGE, widespread deregulation, reducing excess government labour, lowering energy costs, and the proposed Gold Card Visa program, which would offer residency to foreign nationals in exchange for a $5 million payment. The revenue raised or saved could then be used reduce the federal debt and fund tax cuts for US citizens.

While the effectiveness and legality of the administration’s plan are open to debate, the scale of the US debt problem, which these measures are in part designed to address, is serious and cannot be ignored. In his most recent annual letter, BlackRock CEO Larry Fink highlighted the scale of the challenge for America. He wrote, “This year, interest payments will surpass $952 billion, exceeding defence spending. By 2030, mandatory government spending and debt service will consume all federal revenue, creating a permanent deficit.” Whatever your view on tariffs or cutting back government spending, it’s fair to say that with debt levels becoming increasingly alarming, desperate times may well call for desperate measures. And if no action is taken, there’s every chance times could become even more desperate.

This is all theoretical, of course. What ultimately matters is how events unfold in reality, beyond the short-term market movements we’ve seen recently. The real focus for investors in the months ahead is how these developments begin to affect the US economy. Inflation, GDP, and unemployment will be among the key indicators to watch. Trump may be forced to reverse course if tariffs drive up inflation, trigger retaliation, or disrupt critical industries. On the other hand, tariffs might not actually reflect a long-term policy shift. They could serve as a short-term pressure tactic or bargaining chip, consistent with Trump’s "Art of the Deal" approach to negotiation. In that sense, tariffs may be the opening move rather than the final objective.

Record rotation to Europe

While the ASX 200 and S&P 500 have both lagged in 2025, each down around 3% to 5% year to date, European markets are showing notable strength. A recent Bank of America Fund Manager Survey revealed that the latest rotation from US to European equities was the most significant since the survey began in 1999. In investing, a rotation simply refers to the movement of money from one market to another, whether that is between sectors, investment styles, asset classes or geographic regions. Major indices in Germany, Spain, Austria, and Italy have all climbed more than 15% since the start of the year. The iShares MSCI Poland ETF (EPOL:US) is up 36%, while the MSCI Europe Financials ETF (EUFN:US) has gained 23.5%. According to MarketWatch, it has been 25 years since European equities not only outperformed US stocks but also rose during a period when American markets declined.

^{Chart: Year-to-date performance of European markets and sectors vs S&P 500 and ASX 200, Google Finance}

Several key factors are driving this divergence. The first is geopolitics. Uncertainty surrounding tariffs under the Trump administration has weighed on US sentiment. At the same time, by signalling a retreat from its traditional leadership role in global security, the United States has shifted more responsibility to Europe. That shift has prompted countries such as Germany to significantly increase defence and infrastructure spending. European defence stocks have rallied strongly, with Rheinmetall (RHM:DE) up more than 150% over the past year. A second factor is valuations. Europe currently offers a more attractive relative entry point. As investors reassess the recent unwinding of the tech trade in the US, capital is rotating toward regions that appear more undervalued. The forward price-to-earnings ratio of the MSCI Europe Index currently sits at 14.27, compared with 21.96 for the MSCI USA Index.

So far, gains in European equities have not been spread evenly across sectors. The rally has been concentrated in financials, defence, and industrials. These sectors have led the charge, while many retail investor favourites have lagged. Novo Nordisk (NOVO/B:DK), SAP (SAP:DE), LVMH (MC:FR), and ASML (ASML:US) are either flat or negative year to date. The question now is whether Europe’s momentum is sustainable and whether it can support broader market performance beyond a handful of sectors.

So why does Europe’s recent performance matter for investors? It highlights the importance of geographic diversification and provides a real-time insight into how tariffs are influencing stock market performance. If protectionist policies continue to gain momentum, factors such as geographic concentration and companies’ exposure to supply chain or trade risks could play a bigger role in shaping investment returns.

Aussie gold miners dominate

In last month’s outlook, we flagged gold’s push toward US$3,000 per ounce and the rally in Australian gold miners as a key trend to watch. That trend played out decisively, with the metal continuing to push above US$3,100 in recent days. Remarkably, all ten of the ASX 200’s top-performing stocks in March were gold miners. Among the leading performers in March were Spartan Resources (SPR), West African Resources (WAF), and Regis Resources (RRL), all benefiting as gold prices surged to record highs. Spartan was up close to 45% in March.

Geopolitical uncertainty around tariffs and Ukraine and central bank buying continue to support the price of gold. Gold tends to shine in times of fear and volatility. Right now, both are front and centre. The real question is whether this is a short-term spike or the start of a longer-term structural breakout. Macquarie Group projects a peak of US$3,500 per ounce by the third quarter of 2025. Goldman Sachs now expects gold to reach US$3,330 by year-end, with a high-risk scenario pointing to a possible surge to US$4,500 within 12 months. Geopolitical de-escalation in Ukraine or the Middle East, along with a softening of Trump-era tariffs or central bank policy shifts that put downward pressure on gold, could all work against these price targets.

At the other end of the spectrum, Australian tech companies have lost their shine in 2025. Block (XYZ), WiseTech Global (WTC), and Zip Co (ZIP) are all down more than 30% year to date. WiseTech’s decline has been linked to governance concerns, while Block and Zip have been weighed down by weak economic data out of the US, which has hit fintech sentiment more broadly, along with recent disappointing earnings results. Zip led losses on the ASX 200 in March, dropping 36% for the month. It remains the index’s worst-performing stock year to date, with a decline of 46%. Following steep declines, these stocks are likely to remain under scrutiny as investors assess whether improving fundamentals could signal a potential shift in direction.

Ready to explore international markets?

Investing internationally is easier than you think. Access 45,000+ shares and ETFs across the ASX and 15 international markets. Plus, get $0 brokerage on 10,000+ US stocks and ETFs. FX spreads apply.

Find your next investment in:

• Americas: United States and Canada

• Asia Pacific: Singapore, Japan, Hong Kong, and New Zealand

• Europe: United Kingdom, Sweden, Denmark, France, Netherlands, Belgium, Switzerland, Germany, and Spain

This article provides general information only. It has been prepared without taking account of your objectives, financial situation or needs. It is not to be construed as a solicitation or an offer to buy or sell any financial instruments, or as a recommendation and/or investment advice. It does not intend to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any financial instruments. You should consider your objectives, financial situation and needs before acting on the information in this article. CMC Markets believes that the information in this article is correct, and any opinions and conclusions are reasonably held or made on information available at the time of its compilation, but no representation or warranty is made as to the accuracy, reliability or completeness of any statements made in this article. CMC Markets is under no obligation to, and does not, update or keep current the information contained in this article. Neither CMC Markets nor any of its affiliates or subsidiaries accepts liability for loss or damage arising out of the use of all or any part of this article. Any opinions or conclusions set forth in this article are subject to change without notice and may differ or be contrary to the opinions or conclusions expressed by any other members of CMC Markets.