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

Having awakened at the start of last week to the game-changing news that an unidentified Chinese start-up had established a low-cost artificial intelligence (AI) chatbot, they found out over the weekend that Donald Trump really was going to bring out his hazard of introducing an all-out trade war.

The US President's choice to slap a 25 per cent tariff on items imported from Canada and Mexico, and a 10 per cent tax on deliveries from China, sent stock markets 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 technology stocks, this time the effects of a potentially drawn-out trade war could be far more damaging and extensive, and maybe plunge the worldwide economy - consisting of the UK - into a downturn.

And the decision to postpone the tariffs on Mexico for one month used just partial break on worldwide markets.

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

In its form, a tariff is a tax enforced by one nation on products imported from another.

Crucially, the duty is not paid by the foreign business exporting however by the receiving organization, which pays the levy to its government, supplying it with helpful tax revenues.

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

These could be worth as much as $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 per cent - of the $3.1 trillion of products imported into the US in 2023.

Most economic experts hate tariffs, mainly due to the fact that they trigger inflation when business pass on their increased import costs to customers, sending out costs higher.

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

In his recent election campaign, Mr Trump made clear of his strategy to impose import taxes on neighbouring countries unless they suppressed the prohibited 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 perhaps the UK.

The US President says Britain is 'escape of line' however a deal 'can be exercised'.

Nobody must be shocked the US President has decided to shoot very first and ask questions later.

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

Shares in European customer items companies such as drinks giant Diageo, that makes Guinness, fell greatly amidst fears of higher costs for their items

What matters now is how other countries respond.

Canada, Mexico and China have already retaliated in kind, triggering fears of a tit-for-tat escalation that could engulf the entire international economy if others follow suit.

Mr Trump concedes that Americans will bear some 'short term' pain from his sweeping tariffs. 'But long term the United States has been duped by essentially every nation worldwide,' he added.

Mr Trump says the tariffs enforced by previous US President William McKinley in 1890 made America prosperous, ushering in a 'golden age' when the US overtook Britain as the world's most significant economy. He desires to repeat that formula to 'make America terrific again'.

But professionals state he runs the risk of a re-run of the Smoot-Hawley Tariff Act of 1930 - a devastating step presented simply after the Wall Street stock exchange crash. It raised tariffs on a broad swathe of goods imported into the US, resulting in a collapse in international trade and exacerbating the effects of the Great Depression.

'The lessons from history are clear: protectionist policies hardly ever provide the desired benefits,' states Nigel Green, primary executive of wealth manager deVere Group.

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

'The Smoot-Hawley tariffs intensified the Great Depression by stifling global trade, and elearnportal.science today's tariffs run the risk of triggering the same destructive cycle,' Mr Green includes.

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

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

Fortunately is that inflation didn't spike in the consequences, which may 'lighten current monetary market fears that higher tariffs will mean greater prices and higher rates will indicate higher rate of interest,' Mr Mould includes.

The reason prices didn't leap was 'since consumers and business declined to pay them and looked for less expensive alternatives - 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 pass on the expense effect of the tariffs.'

To put it simply, companies soaked up the greater expenses from tariffs at the expenditure of their profits and sparing customers cost increases.

So will it be different this time round?

'It is difficult to see how an escalation of trade tensions can do any great, to anybody, a minimum of over the longer run,' states Inga Fechner, senior economic expert at investment bank ING. 'Economically speaking, intensifying trade stress are a lose-lose scenario for all nations involved.'

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

The agreement amongst specialists is that tariffs will mean the cost of obtaining stays greater for longer to tame resurgent inflation, but the truth is no one actually understands.

Tariffs might also result in a falling oil rate - as demand from market and consumers for dearer products sags - though a barrel of crude was trading higher on Monday amidst worries that North American supplies may be interrupted, causing scarcities.

Either way a dramatic drop in the oil cost may not suffice to save the day.

'Unless oil prices stop by 80 percent to $15 a barrel it is unlikely lower energy costs will offset the impacts of tariffs and existing inflation,' says Adam Kobeissi, founder of an influential investor newsletter.

Investors are playing the 'Trump tariff trade' by changing out of dangerous assets and into conventional safe houses - a pattern specialists say is most likely to continue while uncertainty continues.

Among the hardest struck are microchip and technology stocks such as Nvidia, which fell 7 percent, and UK-based Arm, which is off 6 percent, as monetary markets brace for retaliation from China and curbs on semiconductor sales.

Other trade-sensitive business were also struck. Shares in German carmakers Volkswagen and BMW and consumer items companies such as drinks huge Diageo fell greatly amid fears of higher costs for their products.

But the biggest losers have actually been cryptocurrencies, which soared when Mr Trump won the US election however are now falling back to earth.

At $94,000, Bitcoin is down 15 per cent from its current all-time high, while Ethereum - another significant cryptocurrency - fell by more than a third in the 60 hours since news of the Trump trade wars hit the headlines.

Crypto has actually taken a hit because financiers believe Mr Trump's tariffs will sustain inflation, which in turn may cause the US main bank, the Federal Reserve, to keep interest rates at their existing levels or perhaps increase them. The effect tariffs may have on the course of rates of interest is uncertain. However, greater interest rates make crypto, which does not produce an earnings, less appealing to investors than when rates are low.

As financiers run away these extremely volatile properties they have actually stacked into traditionally safer bets such as gold, which is trading at a record high of $2,800 an ounce, and the dollar, which surged against significant currencies the other day.

Experts say the dollar's strength is in fact a boon for the FTSE 100 since many of the British business in the index make a great deal of their money in the US currency, implying they benefit when profits are translated into sterling.

The FTSE 100 fell yesterday however by less than much of the major indices.

It is not all doom and gloom.

'One big hope is that the tariffs do not last, while another is that the US Federal Reserve assists out with some rate of interest cuts, something for which Trump is already calling,' states AJ Bell's Mr Mould.

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

Whenever stock markets wobble it is tempting to stress and sell, but holding your nerve normally pays dividends, specialists state.

'History also shows that volatility breeds opportunity,' says deVere's Mr Green.

'Those who think twice risk being caught on the incorrect side of market motions. But for those who gain from past interruptions and take definitive action, this duration of volatility might present a few of the very best chances in years.'

Among the sectors Mr Green likes are European banks, due to the fact that their shares are trading at fairly low costs and rates of interest in the eurozone are lower than somewhere else. 'Defence stocks, such as BAE Systems, are also appealing since they will give a stable return,' he adds.

Investors ought to not rush to sell while the picture is cloudy and can keep an eye out for possible bargains. One method is to invest regular monthly amounts into shares or funds rather than large lump sums. That method you lower the risk of bad timing and, when markets fall, you can purchase more shares for your cash so, as and when costs increase again, you benefit.