How to invest amid a global trade storm
Those looking to cut their exposure to US equities in the near term may want to consider China, Europe’s defence sector, or money market funds and short-duration bonds
DURING his re-election campaign, Donald Trump proposed universal tariffs of 10 to 20 per cent and a 60 per cent tariff on China. Many dismissed these as empty threats, doubting he would actually implement them.
However, not only has he followed through with a 10 per cent universal tariff on Liberation Day – since panned by some as Obliteration Day – he has also imposed reciprocal tariffs on around 60 countries, with rates reaching as high as 50 per cent. In fact, China now faces a cumulative tariff rate of 54 per cent, after factoring in earlier tariffs of 20 per cent.
“America First” policy set to curtail consumption and economic growth
It is understandable why Trump wants to reduce the US trade deficit and reindustrialise the country. Achieving this could potentially create more jobs for Americans, bolster supply-chain resiliency, and foster greater innovation. However, the pace at which he is trying to execute his agenda through aggressive tariffs will inevitably hurt US consumers and businesses.
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