President Trump’s sweeping tariffs have significantly disrupted global markets in 2025, with his universal 10% baseline and sector-specific duties as high as 25% on steel and aluminium sending shock waves through economies worldwide. UK stocks have dived, with the FTSE 100 entering correction territory.
While I’m extremely cautious, there’s some evidence the correction appears increasingly overdone. While UK exports to the US represent 2.2% of our GDP, our post-Brexit regulatory flexibility positions the UK uniquely compared to EU counterparts. What’s more, analysis from Aston University suggests that UK exports to the US could surge by 17.5% through trade diversion effects if the EU and US fail to hammer out a deal.
What’s more, the US exceptionalism narrative is weakening as inflation concerns mount. With US tariffs potentially adding 2.2 percentage points to American inflation, capital will likely seek alternative havens. Meanwhile, the 30% GDP gap between Europe and the US may begin to narrow once again. I’d also suggest that Trump’s constantly changing tariffs have worsened investor sentiment. I’m finding it hard to add to my US holdings.
Here’s what I’m buying
Despite the possibility of a rally, I moved to a largely cash position early in the Trump presidency. However, I’ve been slow to initiate positions in UK stocks. I think it’s best to be extremely cautious. The one than I have bought is Jet2 (LSE:JET2).
I think Jet2 should be getting more attention for its strong financial position. It currently boasts a net cash reserve of £2.3bn and a market cap of £2.7bn, making its enterprise value just £400m. That’s equivalent to just one year of forecasted net income. But it’s not just me. Institutional analysts highlight its undervaluation, with an average price target 66% higher than current levels.
The company plans to invest £5.7bn by 2031 to modernise its fleet, transitioning to a predominantly Airbus configuration, which could enhance operational efficiency and reduce costs in the long term.
However, risks remain. Jet2’s older fleet (average age 13.9 years) increases maintenance costs until upgrades are complete, and the autumn Budget is certainly going to push up costs. While fuel price volatility — fuel accounts for 25%-30% of operating costs and sometimes more — could pressure margins, fuel has got cheaper since 2 April.
My bullishness simply comes down the valuation. Jet2 essentially has a net cash adjusted price-to-earnings ratio of one. That’s so many times cheaper than its peers.
Here’s what I may buy (more of)
Scottish Mortgage Investment Trust is a business I always have my eye on. It invests in tech-oriented companies like Nvidia and SpaceX, and due to gearing — borrowing to invest — it can be even more volatile than the growth companies it invests in. Nonetheless, the long-term performance has been strong.
Then there’s AstraZeneca. The stock has fallen on concerns about Trump’s pharma tariffs. But I just don’t think the tariffs will end up being that significant. AstraZeneca is a big player in oncology. Making cancer drugs more expensive for Americans just doesn’t make sense, while making these companies manufacture in the US could take years.
I own both these stocks, but may look to buy more.
