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

Having gotten up at the start of last week to the game-changing news that an unknown Chinese start-up had actually established a cheap artificial intelligence (AI) chatbot, they found out over the weekend that Donald Trump truly was going to perform his risk of releasing a full-blown trade war.

The US President's choice to slap a 25 per cent tariff on products imported from Canada and Mexico, and a 10 percent tax on deliveries from China, sent stock markets into another tailspin, simply as they were recovering from recently's thrashing.

But whereas that sell-off was mainly restricted to AI and other innovation stocks, this time the impacts of a possibly lengthy trade war might be a lot more damaging and widespread, and perhaps plunge the worldwide economy - consisting of the UK - into a depression.

And the choice to delay the tariffs on Mexico for one month offered just partial reprieve on .

So how should British financiers play this highly unpredictable and unforeseeable situation? What are the sectors and possessions to avoid, and who or what might emerge as winners?

In its easiest form, a tariff is a tax enforced by one country on goods imported from another.

Crucially, the responsibility is not paid by the foreign company exporting but by the getting company, which pays the levy to its federal government, providing it with beneficial tax profits.

President Donald Trump speaking to press 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 experts at Capital Economics.

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

Most economic experts dislike tariffs, mainly because they trigger inflation when business hand down their increased import costs to consumers, sending out rates higher.

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

In his recent election campaign, Mr Trump made clear of his plan to enforce import taxes on neighbouring nations unless they curbed the unlawful circulation of drugs and migrants into the US.

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

The US President states Britain is 'escape of line' but an offer 'can be worked out'.

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

Trade sensitive business in Europe were also struck by Mr Trump's tariffs, valetinowiki.racing including German carmakers Volkswagen and BMW

Shares in European customer goods business such as beverages giant Diageo, that makes Guinness, fell dramatically amidst fears of higher expenses for their products

What matters now is how other countries react.

Canada, Mexico and China have currently struck back in kind, prompting worries of a tit-for-tat escalation that could swallow up the whole worldwide economy if others do the same.

Mr Trump concedes that Americans will bear some 'brief term' pain from his sweeping tariffs. 'But long term the United States has been duped by virtually every country on the planet,' he included.

Mr Trump says the tariffs imposed by previous US President William McKinley in 1890 made America flourishing, introducing a 'golden age' when the US overtook Britain as the world's biggest economy. He wishes to repeat that formula to 'make America terrific again'.

But experts say he runs the risk of 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 goods imported into the US, resulting in a collapse in worldwide trade and worsening the effects of the Great Depression.

'The lessons from history are clear: protectionist policies seldom provide the designated benefits,' states Nigel Green, president of wealth supervisor deVere Group.

Rising costs, inflationary pressures and disrupted worldwide supply chains - which are even more inter-connected today than they were a century ago - will impact organizations and consumers alike, he added.

'The Smoot-Hawley tariffs worsened the Great Depression by stifling international trade, and today's tariffs risk activating the exact same devastating cycle,' Mr Green adds.

How Trump's personal crypto raises worries of 'dangerous' corruption in White House

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

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

Fortunately is that inflation didn't spike in the consequences, which may 'mitigate existing monetary market fears that higher tariffs will suggest greater rates and higher rates will suggest greater rate of interest,' Mr Mould includes.

The reason prices didn't jump was 'since customers and companies refused to pay them and looked for less expensive choices - which is specifically the Trump strategy this time around', Mr Mould explains. 'American importers and foreign sellers into the US chosen to take the hit on margin and did not hand down the expense impact of the tariffs.'

In other words, companies took in the higher costs from tariffs at the expenditure of their profits and sparing consumers rate increases.

So will it be different this time round?

'It is difficult to see how an escalation of trade tensions can do any excellent, to anybody, at least over the longer run,' says Inga Fechner, senior financial expert at financial investment bank ING. 'Economically speaking, [users.atw.hu](http://users.atw.hu/samp-info-forum/index.php?PHPSESSID=afb2026cfd64505a08a58e2a15533524&action=profile