The imminent arrival of a new tax year means investors would typically be looking for shares to buy for the latest ISA period. But with global stocks sinking following President Trump’s worldwide tariffs, these are anxious times. Might it be a better idea for would-be ISA investors to sit on the sidelines instead?
I think not. Radical White House plans undoubtedly raise significant risks, but they might also create some fabulous (and rare) long-term investment opportunities worth considering. Here’s how investors could aim to build tax-free ISA wealth amid stock market chaos.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Global trade war fears
Wall Street’s reaction to President Trump’s ‘Liberation Day’ speech erased an eye-watering $3.1trn from the US stock market. Upending decades of American foreign policy, Trump claimed other nations had “looted, pillaged, raped, and plundered” the world’s largest economy. No country was spared his wrath.
Those that got off lightly (the UK among them) will be subjected to a universal baseline 10% tariff. Only Canada and Mexico are exempt, but previous 25% tariffs on billions of dollars of goods remain in place. The “worst offenders” in Trump’s eyes, including China and some Southeast Asian countries, were whacked with duties over 40%.
This has sparked fears of a new era of global protectionism. Supply chain destruction, inflationary spikes, and a possible global recession are very real risks. It’s a testing time to be contributing to a freshly-minted or ongoing Stocks and Shares ISA!
Long-term investing
Unfortunately, investors may have to endure more bloody days ahead for their ISA portfolios. Tariff-fuelled uncertainty could freeze companies’ capital investments, and share prices suffer when extreme fear drives market sentiment.
That said, beaten-down stocks may ultimately offer generational buying opportunities to consider. For instance, ‘Magnificent 7’ stocks are in a bear market. Many of these businesses will likely be innovative, profitable enterprises long after Donald Trump leaves the White House, even if the near-term risks are considerable.
| Stock | YTD return |
|---|---|
| Alphabet | -20% |
| Amazon | -19% |
| Apple | -17% |
| Microsoft | -11% |
| Meta Platforms | -11% |
| Nvidia | -26% |
| Tesla | -30% |
Closer to home, I think FTSE 100 stocks like biotech giant AstraZeneca and defence contractor BAE Systems are worth considering for a new ISA year.
Granted, neither’s immune to widespread market panic. But at least pharmaceuticals appear to be exempt from the reciprocal tariffs for now, and rising military expenditure could help defence stocks defy the sell-off.
A stock that keeps going higher
One company that’s trading near an all-time high despite stock market turmoil is Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B).
Armed with $334bn in cash reserves, Berkshire’s sitting on the largest stockpile ever held by a public company. It’s hard to think of another firm better prepared for a full-blown stock market crash.
Buffett’s spent more than 50 years at the conglomerate’s helm, steering the Berkshire Hathaway share price higher through the inflationary 1970s, Black Monday, the dotcom bubble, the global financial crisis, and the Covid-19 pandemic. Trump’s tariffs will likely be no match for the ‘Oracle of Omaha’.
At 94, Buffett’s age is a potential concern for investors. He won’t live forever. One day, his investing wisdom will be sorely missed by Berkshire shareholders.
Nonetheless, in difficult times, ISA investors keen to get rich would be wise to consider taking refuge in Berkshire Hathaway shares.
This post was originally published on Motley Fool
