Fund groups are turning their backs on US investments because they expect Donald Trump’s reciprocal tariffs to be partially reintroduced when the current 90 day pause expires on 8 July.

They believe the country will consequently deliver less than 1% of real GDP growth in 2025, which indicates the US is susceptible to a recession this year.

The figures have been published in Quilter’s latest Investor Trends Survey, which canvassed 21 of the leading fund management institutions representing £22trn of assets.

Four in five (80%) of respondents said they think tariffs will be partially reintroduced, with 13% expecting them to be largely brought back.

By contrast, no one surveyed expected them to be brought back in the same shape as they were first introduced, while just 7% thought they would be dropped completely.

Fund groups are also expecting the news to translate into poorer returns for investors with exposure to the US.

At the end of 2024 following the election of Donald Trump, survey participants were asked which region they believed would offer the best and worst index returns. At that time, fund groups overwhelmingly expected the US to be the best performer.

Fast forward just six months and their view has been reversed. In the latest survey, the US is expected to have the worst returns, as voted for by 53% of respondents.

Lindsay James, investment strategist at Quilter, said: “President Trump has clearly been prepared, or forced, to listen to markets, and fund groups are expecting this will translate into a better programme of tariffs compared to 2 April.

“But he also will not want a repeat of his backtracking. As ever with the current US administration, the only certainty is uncertainty, and that in itself is not good for markets.”

She said White House polices have been pinpointed by fund groups as the cause for sentiment in the US to swing so dramatically in a negative direction. “While many have sought to tread carefully to avoid overt criticism of the recent policies, the investment community is in widespread agreement that the current approach is damaging on many fronts.”