Trump Tariffs, AI Boom Rewrite 2025 Markets Worldwide

If there is one word to describe the past year in financial markets, it is a simple choice – Trump.

The US President was there for all the crucial turnaround points of the year, the biggest of which was his so-called 'Liberation Day' tariff announcements, which sent world markets into a savage tailspin.

The cause of the extreme market volatility following the tariff announcements on April 2 was not so much the tariffs themselves, but the incredible uncertainty surrounding them as Trump effectively entered into a series of protracted trade negotiations with the rest of the world.

Allies bear tariffs even harder

It didn't matter whether the countries he was negotiating with were close allies or sworn enemies – indeed, Trump seemed to reserve some of the worst treatment for countries that had been traditional supporters of the US's role in the world.

It was the chaos of the on-again, off-again tariffs, coupled with very high retaliatory tariffs for perceived slights, that really shook up world markets, which had grown accustomed to decades of free trade and falling tariff walls.

Tariff myths keep growing

Quite amazingly, Trump was able to convince large sectors of the United States that other countries were paying for the new tariffs when they were actually a tax coming out of the pockets of everyday Americans through higher prices.

Whether he can continue to convincingly sell that myth as prices keep rising is debatable, but it is the sort of cognitive dissonance we have come to expect from a man who never misses a chance to spin his way out of trouble.

While the jury is still out on the full ramifications of the tariff wars, from a share market perspective, the initial volatility has been replaced with an almighty boom for artificial intelligence stocks and anything that is even vaguely connected to them, from copper mines to power supplies and, of course, chip makers and hyperscaling technology companies.

An American farmer who is struggling to buy fertiliser for his field at a reasonable price might disagree, but it was only a matter of months before animal spirits reasserted themselves and pushed stocks to new records in an all-pervading AI trade that flowed through to many global share markets including our own.

Here in Australia the ASX has gained around 14% from its lows in April after Trump’s “liberating” press conference.

However, Australia has been left in the weeds a little compared with other markets around the world with a 6% overall rise for 2025 so far comparing unfavourably to markets in China, Japan, Europe and the US which all saw double digit yearly rises.

Commonwealth shares mystify investors

Here on the Australian market, one of the biggest games of the year was watching what happened to the share price of our most valuable company Commonwealth Bank (ASX: CBA).

With passive investing using exchange traded funds based on the ASX 200 growing very strongly in Australia, this had the effect of boosting the share prices of our biggest companies and none defied gravity more spectacularly than Commonwealth Bank.

No matter how many analysts put out sell recommendations on the bank, its share price just kept going higher, reaching an incredible $191.40 in July.

Even the massive CBA shareholder Australian Foundation (ASX: AFI) could not resist the lure of selling down some CBA shares, which should have been a clear sell signal for all of us.

Eventually gravity took over and it has been all downhill from the July peaks with shares in Commonwealth Bank falling around 20% to just $152.74, with consensus broker recommendations remaining stuck on sell.

As well, the share prices of all the big banks sagged a little at the end of the second half of the year, as did established household names such as Telstra (ASX: TLS), Wesfarmers (ASX: WES) and CSL (ASX: CSL).

Copper looking positive thanks to AI and electrification

While Australia's technology sector is small and immature compared to giant companies in the US, Europe and Japan, the coming year could be a different story as the buzz around AI and data centres widens out to include companies that make the raw ingredients that are vital to continuing the investment boom.

One of the principal ingredients is copper, which is not only used in data centres and to provide power but is also central to the electric car revolution and the build-out of renewable energy.

In Australia we have two of the world’s really big copper producers in BHP (ASX: BHP) and Rio Tinto (ASX: RIO) and already they are showing signs of building a platform to reach higher share prices.

Gold a big gainer on uncertainty

Gold is another sector that Australia excels in and, even though President Trump may have been tough on trade, he has proved to be an absolute boon for the Australian gold sector.

Official projections now have Australia exporting an extraordinary $60 billion of gold in 2025-26 which positions it as the second biggest Australian export behind iron ore and moving ahead of LNG.

Conveniently, there are no US tariffs on gold.

That year-on-year growth of almost 30% has been President Trump's biggest gift to our country, even though the buildup in the gold price is largely due to uncertainty around the world economy and trade tensions, which Trump himself created.

Naturally, the prices of listed gold producers on the Australian market have continued to boom in line with the rocketing gold price, and miners are really hitting their straps to export as much of the shiny metal as possible.

So, while President Trump has caused plenty of worries for Australian investors, he has also created great opportunities which Australia has been quick to profit from.

With great uncertainty also comes great opportunity, and in Australia, along with the rest of the world, we will need to remain nimble and attentive to the activities of President Trump, a man who looks set to continue to move markets around the globe in the coming year.