Market Overview – April 2025

Defining and taming uncertainty · 9 April 2025

On April 2nd, Donald Trump announced heavy « reciprocal » customs duties, including a minimum of 10% on all trading partners, and higher rates for 60 countries running a trade surplus with the United States.
Retaliations and negotiations will continue in the coming weeks, making the assessment of the impact of this trade policy on the world economy particularly complex. American businesses and consumers are now operating in a thick fog. From one day to the next, the rules change, exemptions fall or are negotiated opaquely, and the final objectives remain unclear. Even before the tariffs come into force, the economic consequences of this uncertainty are already very real: a loss of visibility for businesses, leading to a freeze in investments, and, on the household side, a decline in consumption. The uncertainty generated by this chaotic approach, even more than the tariffs themselves, is becoming a major brake on economic activity. One of the most used, even worn out, terms in economic and financial analyzes is uncertainty. Sometimes invoked to explain a market decline, sometimes to justify increased caution in forecasts, it is omnipresent. But since Donald Trump’s return to power, this term has taken on a whole new dimension. According to the dictionary, uncertainty is the character of that which is not known with certainty. In finance, uncertainty is distinguished from risk. When we can assign probabilities to different scenarios and evaluate their consequences, we speak of risk. This allows you to rely on statistical approaches to optimize your strategy, especially if the decision is repeatable over time. Uncertainty escapes this logic. It occurs when the probabilities are unknown, and the consequences are difficult to assess. Managing it requires broader strategic thinking.

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