This is part of our monthly pension update series. Catch up on last month’s summary here: What happened to pensions in April 2025?
US President Trump has stolen the spotlight on the world stage with his bold “America First” approach to foreign policy and trade negotiations. In this ongoing theatre of geopolitics, each tariff and concession feels like a carefully choreographed act. By quoting sky high tariff figures, he’s been able to negotiate with world leaders to accept more favourable trade deals for the US.
While successful with some countries, it’s backfired with others. China responded with reciprocal tariffs of their own, escalating trade tensions. This peaked with US tariffs on Chinese imports of 145% and Chinese tariffs on US goods of 125%. The public outcry from businesses reliant on international trade was loud enough to call both world leaders back to the negotiating table. On 14 May, a 90-day tariff pause was agreed (set to expire on 12 August) with the initial tariff rates put back in place.
One casualty of President Trump’s aggressive negotiation tactics is tech giant Apple. Around 90% of Apple’s iPhones are assembled in China. If there were triple digit tariffs applied on Chinese goods, this could double the cost of an iPhone for US consumers. In response, Apple has committed to moving more of its manufacturing to India over the coming years.
A big diplomatic breakthrough occurred in May with the UK-US trade deal. After intensive negotiations, the UK Prime Minister Sir Keir Starmer and President Trump were able to arrive at a mutually beneficial agreement for both countries. This settled elements of economic uncertainty brought about by President Trump’s various attacks on foreign export industries.
Keep reading to find out how the UK-US trade relationship shifted in May and what it could mean for your pension.
What happened to stock markets?
In the UK, the FTSE 250 Index rose by almost 6% in May. This brings the 2025 performance close to +2%.
Source: Google Market Data
In Europe (excluding the UK), the EuroStoxx 50 Index rose by 4% in May. This brings the 2025 performance close to +10%.
Source: Google Market Data
In North America, the S&P 500 Index rose by over 6% in May. This brings the 2025 performance close to +1%.
Source: Google Market Data
In Japan, the Nikkei 225 Index rose by over 5% in May. This brings the 2025 performance close to -4.8%.
Source: Google Market Data
In the Asia Pacific (excluding Japan), the Hang Seng Index rose by over 5% in May. This brings the 2025 performance close to +16%.
Source: Google Market Data
The art of the UK-US trade deal
The trade relationship between the UK and the US has been under intense scrutiny in recent months, with May proving to be a turning point. Traditionally, the US has enjoyed a ‘trade surplus’ with the UK. This means the US exports goods and services of higher value than those they import from the UK. As a result, the UK is a valuable trading partner for the US economy.
When President Trump made his ‘Liberation Day’ announcement on 2 April, the UK was given the lowest tariff rate of 10%. On the surface, this looked like a win. But the reality of tariffs is that the businesses affected will likely pass the costs to consumers. This would lead to higher costs for UK consumers of US goods and services, which could cause the UK’s rate of inflation to increase.
The next challenge to UK-US trade relations came when President Trump announced a 25% tariff on British car exports and steel products. The US remains the largest export market for British cars and the second-largest for its steel. Prime Minister Starmer chose not to retaliate to this development and instead kept trade discussions friendly.
On 5 May, President Trump announced a 100% tariff on movies made in foreign countries. This became the final straw for Prime Minister Starmer. Increasingly Hollywood blockbusters such as the latest Mission Impossible film and Netflix hits like the Bridgerton series have been filmed in the UK. This is in part due to the UK’s lower production costs when compared to the US.
On 8 May, the UK and US reached a trade agreement. Under the deal, the US agreed to remove tariffs on British airplane parts and metals up to a certain limit. Also lowering tariffs on 100,000 British cars from 25% to 10%. In return, the UK agreed to get rid of tariffs on American ethanol. In addition to increasing its beef imports from the US, raising the limit from 1,000 metric tons to 13,000 metric tons.
However, the UK will continue to ban hormone-treated US beef and charge a 10% tariff on US cars, along with retaining its digital services tax. In the end, reactions have been mixed from both sides of the Atlantic Ocean. Some critics have pointed fingers at President Trump for not supporting the US car industry. While others have questioned whether Prime Minister Starmer did enough during negotiations.
What does a UK-US trade deal mean for my pension?
Think of publicly listed companies as plants in a garden. They can thrive when all the elements they need to grow are readily available. For businesses this could be low taxes and high consumer spending. This creates increased profits that can be reinvested to support future growth.
If the economic environment becomes harsh - through increased competition or economic uncertainty - these companies may struggle. Smaller startups, like young saplings, are especially vulnerable and may not survive tough conditions.
Through your pension, you’re likely invested in both US and UK publicly listed companies. This is called diversification and, just as a well-tended garden, features a variety of plants that can weather different seasons, your investments are spread across multiple companies and geographies.
If the UK-US trade deal creates a favourable environment for businesses, it can lead to higher share prices for those companies. When you invest in companies that see their share prices grow, you’ll benefit from that growth in your pension.
Remember, politics is short-term and investing is long-term. With diversification, your pension can flourish in the long-term as the growth of some investments can balance out the losses of others.
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
