It's been another 'Manic Monday' for savers and financiers.

Having gotten up at the start of recently to the game-changing news that an unknown Chinese start-up had actually developed a low-cost synthetic intelligence (AI) chatbot, they learned over the weekend that Donald Trump truly was going to carry out his danger of launching an all-out trade war.

The US President's choice to slap a 25 percent tariff on goods imported from Canada and Mexico, and a 10 per cent tax on shipments from China, sent out stock exchange into another tailspin, just as they were recuperating from last week's rout.

But whereas that sell-off was mainly restricted to AI and other innovation stocks, this time the results of a possibly protracted trade war might be far more destructive and extensive, and perhaps plunge the global economy - consisting of the UK - into a depression.

And the decision to postpone the tariffs on Mexico for one month offered only partial respite on worldwide markets.

So how should British financiers play this highly volatile and unpredictable circumstance? What are the sectors and assets to avoid, and who or what might become winners?

In its most basic type, a tariff is a tax imposed by one country on products imported from another.

Crucially, the responsibility is not paid by the foreign company exporting however by the getting business, which pays the levy to its federal government, supplying it with beneficial tax revenues.

President Donald Trump talking to reporters in Washington today after Air Force One touched down at Joint Base Andrews

These might be worth as much as $250billion a year, or 0.8 percent of US GDP, according to consultants at Capital Economics.

Canada, Mexico and China together represent $1.3 trillion - or 42 per cent - of the $3.1 trillion of products imported into the US in 2023.

Most economic experts hate tariffs, mainly because they trigger inflation when companies hand down their increased import expenses to customers, sending rates higher.

But Mr Trump enjoys them - he has actually explained tariff as 'the most stunning word in the dictionary'.

In his current election campaign, Mr Trump made no trick of his plan to enforce import taxes on neighbouring countries unless they curbed the unlawful flow of drugs and migrants into the US.

Next in Mr Trump's sights is the European Union, where he's said tariffs will 'certainly take place' - and possibly the UK.

The US President says Britain is 'way out of line' however an offer 'can be exercised'.

Nobody should be surprised the US President has chosen to shoot very first and ask questions later on.

Trade delicate business in Europe were likewise hit by Mr Trump's tariffs, including German carmakers Volkswagen and BMW

Shares in European customer goods business such as beverages huge Diageo, which makes Guinness, fell sharply amidst worries of greater costs for their items

What matters now is how other countries react.

Canada, Mexico and China have already struck back in kind, triggering worries of a tit-for-tat escalation that could engulf the whole international economy if others follow match.

Mr Trump yields that Americans will bear some 'short-term' pain from his sweeping tariffs. 'But long term the United States has actually been ripped off by virtually every nation in the world,' he included.

Mr Trump says the tariffs imposed by former US President William McKinley in 1890 made America thriving, ushering in a 'golden age' when the US overtook Britain as the world's most significant economy. He wants to repeat that formula to 'make America great again'.

But specialists state he risks a re-run of the Smoot-Hawley Tariff Act of 1930 - a disastrous measure introduced just after the Wall Street stock market crash. It raised tariffs on a broad swathe of products imported into the US, leading to a collapse in global trade and worsening the results of the Great Depression.

'The lessons from history are clear: protectionist policies seldom deliver the desired benefits,' says Nigel Green, chief executive of wealth supervisor deVere Group.

Rising costs, inflationary pressures and interfered with global supply chains - which are even more inter-connected today than they were a century ago - will affect businesses and customers alike, he included.

'The Smoot-Hawley tariffs worsened the Great Depression by stifling global trade, and today's tariffs run the risk of triggering the very same damaging cycle,' Mr Green adds.

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Perhaps the very best historic guide to how Mr Trump's trade policy will affect investors is from his first term in the White House.

'Trump's launch of tariffs in 2018 did raise profits for America, but US corporate earnings took a hit that year and the S&P 500 index fell by a fifth, so markets have actually naturally taken fright this time around,' states Russ Mould, director at investment platform AJ Bell.

The bright side is that inflation didn't surge in the consequences, which may 'relieve present monetary market fears that higher tariffs will mean higher rates and greater prices will imply higher rates of interest,' Mr Mould adds.

The reason prices didn't leap was 'since consumers and companies declined to pay them and looked for cheaper alternatives - which is precisely the Trump strategy this time around', Mr Mould explains. 'American importers and foreign sellers into the US elected to take the hit on margin and did not pass on the expense impact of the tariffs.'

To put it simply, business soaked up the greater expenses from tariffs at the cost of their profits and sparing consumers cost increases.

So will it be various this time round?

'It is hard to see how an escalation of trade tensions can do any great, to anybody, a minimum of over the longer run,' says Inga Fechner, senior financial expert at financial investment bank ING. 'Economically speaking, intensifying trade tensions are a lose-lose circumstance for all countries involved.'

The impact of an international trade war might be ravaging if targeted economies strike back, costs rise, trade fades and growth stalls or falls. In such a scenario, interest rates might either rise, to suppress higher inflation, or fall, to increase sagging development.

The consensus amongst professionals is that tariffs will indicate the expense of obtaining stays greater for longer to tame resurgent inflation, however the truth is no one actually understands.

Tariffs might also lead to a falling oil rate - as need from market and customers for dearer items droops - though a barrel of crude was trading greater on Monday amid fears that North American supplies might be interrupted, resulting in lacks.

In either case a dramatic drop in the oil cost might not suffice to conserve the day.

'Unless oil costs drop by 80 percent to $15 a barrel it is not likely lower energy expenses will balance out the impacts of tariffs and existing inflation,' says Adam Kobeissi, founder of a prominent financier newsletter.

Investors are playing the 'Trump tariff trade' by switching out of risky possessions and into standard safe sanctuaries - a pattern professionals say is most likely to continue while uncertainty persists.

Among the hardest hit are microchip and technology stocks such as Nvidia, which fell 7 percent, and UK-based Arm, which is off 6 per cent, as financial markets brace for retaliation from China and curbs on semiconductor sales.

Other trade-sensitive business were likewise hit. Shares in German carmakers Volkswagen and BMW and customer products business such as drinks huge Diageo fell sharply amidst fears of greater costs for their items.

But the greatest losers have been cryptocurrencies, which skyrocketed when Mr Trump won the US election but are now falling back to earth.

At $94,000, Bitcoin is down 15 percent from its current all-time high, while Ethereum - another significant cryptocurrency - fell by more than a third in the 60 hours given that news of the Trump trade wars hit the headings.

Crypto has taken a hit because financiers believe Mr Trump's tariffs will sustain inflation, which in turn might trigger the US main bank, the Federal Reserve, to keep interest rates at their existing levels or perhaps them. The effect tariffs might have on the course of interest rates is uncertain. However, higher rates of interest make crypto, which does not produce an earnings, less attractive to financiers than when rates are low.

As investors flee these extremely unstable properties they have stacked into traditionally safer bets such as gold, which is trading at a record high of $2,800 an ounce, and the dollar, which surged against significant currencies the other day.

Experts say the dollar's strength is really a boon for the FTSE 100 since a number of the British companies in the index make a great deal of their money in the US currency, implying they benefit when revenues are equated into sterling.

The FTSE 100 fell the other day however by less than a number of the significant indices.

It is not all doom and gloom.

'One huge hope is that the tariffs do not last, while another is that the US Federal Reserve assists out with some rates of interest cuts, something for which Trump is already calling,' says AJ Bell's Mr Mould.

Traders expect the Bank of England to cut rates this week by a quarter of a percentage point to 4.5 per cent, funsilo.date while the possibility of 3 or more rate cuts later this year have increased in the wake of the trade war shock.

Whenever stock exchange wobble it is appealing to worry and sell, but holding your nerve usually pays dividends, professionals say.

'History likewise reveals that volatility types opportunity,' says deVere's Mr Green.

'Those who think twice danger being captured on the incorrect side of market movements. But for those who gain from previous disturbances and take definitive action, this period of volatility could provide a few of the very best opportunities in years.'

Among the sectors Mr Green likes are European banks, since their shares are trading at fairly low prices and interest rates in the eurozone are lower than somewhere else. 'Defence stocks, such as BAE Systems, are also appealing because they will give a stable return,' he includes.

Investors ought to not hurry to offer while the photo is cloudy and can keep an eye out for possible bargains. One technique is to invest routine monthly amounts into shares or funds rather than large swelling amounts. That method you reduce the threat of bad timing and, when markets fall, you can purchase more shares for your cash so, as and when rates rise again, you benefit.