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

Having awakened at the start of last week to the game-changing news that an unidentified Chinese start-up had actually developed a low-cost expert system (AI) chatbot, they learned over the weekend that Donald Trump actually was going to bring out his danger of launching a full-blown trade war.

The US President's decision to slap a 25 percent tariff on products imported from Canada and Mexico, and a ten per cent tax on shipments from China, sent out into another tailspin, simply as they were recuperating from last week's thrashing.

But whereas that sell-off was mainly restricted to AI and other innovation stocks, this time the effects of a possibly lengthy trade war could be far more damaging and prevalent, and possibly plunge the international economy - including the UK - into a downturn.

And the decision to delay the tariffs on Mexico for one month offered just partial respite on international markets.

So how should British investors play this extremely unpredictable and unforeseeable scenario? What are the sectors and assets to avoid, and who or what might become winners?

In its simplest kind, a tariff is a tax enforced by one country on products imported from another.

Crucially, the task is not paid by the foreign business exporting however by the receiving service, which pays the levy to its government, supplying it with useful tax profits.

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

These could be worth approximately $250billion a year, or 0.8 per cent of US GDP, according to specialists at Capital Economics.

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

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

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

In his recent election campaign, Mr Trump made obvious of his strategy to enforce import taxes on neighbouring countries unless they suppressed 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 happen' - and possibly the UK.

The US President says Britain is 'method out of line' but a deal 'can be worked out'.

Nobody ought to be amazed the US President has actually decided to shoot first and ask questions later.

Trade sensitive business in Europe were likewise hit by Mr Trump's tariffs, consisting of German carmakers Volkswagen and BMW

Shares in European durable goods business such as beverages huge Diageo, which makes Guinness, fell greatly in the middle of fears of greater expenses for their products

What matters now is how other countries respond.

Canada, Mexico and China have currently struck back in kind, triggering fears of a tit-for-tat escalation that could swallow up the entire worldwide economy if others follow match.

Mr Trump concedes that Americans will bear some 'short-term' pain from his sweeping tariffs. 'But long term the United States has actually been swindled by practically every country in the world,' he added.

Mr Trump states the tariffs imposed by former US President William McKinley in 1890 made America prosperous, ushering in a 'golden era' when the US overtook Britain as the world's most significant economy. He wishes to repeat that formula to 'make America excellent again'.

But professionals state he risks a re-run of the Smoot-Hawley Tariff Act of 1930 - a disastrous step introduced simply after the Wall Street stock market crash. It raised tariffs on a broad swathe of items imported into the US, causing a collapse in global trade and exacerbating the results of the Great Depression.

'The lessons from history are clear: protectionist policies seldom provide the intended advantages,' states Nigel Green, primary executive of wealth manager deVere Group.

Rising costs, inflationary pressures and interrupted international supply chains - which are even more inter-connected today than they were a century ago - will impact organizations and customers alike, he included.

'The Smoot-Hawley tariffs intensified the Great Depression by stifling global trade, and today's tariffs risk activating the exact same damaging cycle,' Mr Green includes.

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

'Trump's launch of tariffs in 2018 did raise incomes for America, but US business revenues took a hit that year and the S&P 500 index fell by a 5th, so markets have understandably taken fright this time around,' says Russ Mould, director at financial investment platform AJ Bell.

The bright side is that inflation didn't increase in the consequences, which may 'lighten present financial market fears that higher tariffs will imply greater rates and greater prices will imply greater interest rates,' Mr Mould adds.

The factor costs didn't leap was 'since consumers and business refused 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 cost impact of the tariffs.'

Simply put, business soaked up the greater expenses from tariffs at the cost of their revenues and sparing consumers rate rises.

So will it be various this time round?

'It is tough to see how an escalation of trade stress can do any good, to anyone, sitiosecuador.com a minimum of over the longer run,' says Inga Fechner, senior financial expert at investment bank ING. 'Economically speaking, escalating trade tensions are a lose-lose circumstance for all nations involved.'

The impact of an international trade war might be devastating if targeted economies retaliate, rates rise, trade fades and development stalls or falls. In such a scenario, rate of interest could either increase, to curb greater inflation, or fall, to improve drooping growth.

The consensus amongst experts is that tariffs will imply the expense of obtaining stays greater for longer to tame resurgent inflation, but the truth is nobody actually knows.

Tariffs may also result in a falling oil rate - as need from industry and customers for dearer items sags - though a barrel of crude was trading greater on Monday in the middle of fears that North American products may be disrupted, leading to scarcities.

Either way a remarkable drop in the oil rate might not suffice to conserve the day.

'Unless oil rates visit 80 percent to $15 a barrel it is not likely lower energy costs will balance out the impacts of tariffs and existing inflation,' states Adam Kobeissi, creator of an influential financier newsletter.

Investors are playing the 'Trump tariff trade' by changing out of dangerous properties and into conventional safe havens - a trend professionals say is likely to continue while uncertainty continues.

Among the hardest struck are microchip and technology stocks such as Nvidia, which fell 7 per cent, 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 struck. Shares in German carmakers Volkswagen and BMW and consumer items business such as drinks giant Diageo fell greatly amidst worries of greater expenses for their products.

But the greatest losers have actually 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 major cryptocurrency - fell by more than a 3rd in the 60 hours given that news of the Trump trade wars hit the headings.

Crypto has taken a hit due to the fact that investors think Mr Trump's tariffs will sustain inflation, which in turn may cause the US main bank, the Federal Reserve, to keep rates of interest at their existing levels or even increase them. The impact tariffs might have on the course of rates of interest is uncertain. However, higher rates of interest make crypto, which does not produce an income, less attractive to financiers than when rates are low.

As financiers get away these extremely unpredictable possessions they have stacked into typically much safer bets such as gold, which is trading at a record high of $2,800 an ounce, and the dollar, which surged against major currencies the other day.

Experts say the dollar's strength is really a benefit for the FTSE 100 because much of the British business in the index make a great deal of their money in the US currency, suggesting they benefit when profits are translated into sterling.

The FTSE 100 fell yesterday however by less than much 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 helps out with some rate of interest cuts, something for which Trump is currently calling,' says AJ Bell's Mr Mould.

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

Whenever stock markets wobble it is tempting to worry and offer, but holding your nerve generally pays dividends, specialists state.

'History likewise shows that volatility types opportunity,' states deVere's Mr Green.

'Those who are reluctant threat being captured on the incorrect side of market movements. But for those who gain from past disruptions and take definitive action, this period of volatility could present a few of the very best chances in years.'

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

Investors should not rush to offer while the picture is cloudy and can keep an eye out for potential bargains. One method is to invest routine month-to-month amounts into shares or funds instead of large lump sums. That way you lower the threat of bad timing and, when markets fall, you can buy more shares for your cash so, as and when costs rise again, you benefit.