Welcome back to Bitesize, our monthly data-viz series, where we unpack market developments in a single chart (or two), giving you sharp insights in under five minutes. This month, we explore what history can tell us about the likely market impact of the US-China tariff dispute.
What could be the implications for US markets if further developments in the trade war impact economic growth?
To explore this question, we looked at the relationship between US policy and market outcomes through history.
We all know that, over the long term, equity markets tend to rise. So, our multi-asset team ran an exercise to explore how much influence different presidents have had on US equity market performance. We looked at annualised returns during each presidency, going all the way back to Theodore Roosevelt in 1901 (see Figure 1).
Figure 1: Annualised US equity performance by president, 1901-2025 (per cent)
Note: Daily S&P total return data only available from 1988. Earlier periods use monthly data from inauguration.
Source: Aviva Investors, GFD and Deutsche Bank. Data as of April 30, 2025.
Two key themes stand out. First, the chart shows equity markets generally go up regardless of who is in the White House. Across presidencies, average annualised returns typically fall between 10 per cent and 15 per cent. That tells us that while presidential policies may feel significant in the moment, they often have less impact on long-term market performance than we might assume.
In 2025, the market has been reacting early and significantly to negative developments
Second, the only periods of negative annualised returns over the period occurred during major external shocks: The Great Depression in 1929, the 1973 Oil Shock under President Nixon and the Dot-Com crash, followed by the Global Financial Crisis. While you could argue some policy decisions contributed to these events, the broader point is that it usually takes a major external shock – not just presidential policy – for markets to experience sustained negative performance.
But in 2025, the market has been reacting early and significantly to negative developments, particularly trade tensions and tariff policies targeting key US trading partners – for example, the S&P 500 fell by more than 10 per cent in the week following President Trump’s “Liberation Day” announcement of reciprocal tariffs. So, while it’s still early days, the tone has clearly shifted, with policy uncertainty weighing on equity performance.
In times like these, diversification is more important than ever. By spreading exposure across regions and asset classes, multi-asset strategies can help manage risk in an increasingly unpredictable environment.
