We hosted a special edition of our monthly House View livestream, focused on the latest tariff announcements and the market impact. The conversation featured Jason Draho, Head of Asset Allocation Americas; Kurt Reiman, Head of Fixed Income Americas; David Lefkowitz, Head of US Equities; and Leslie Falconio, Head of Taxable Fixed Income Americas.
We expect the US to announce tariffs on most major trading partners on 2 April, which could lead to a cycle of tit-for-tat escalation in the coming weeks. The direct and indirect effects of tariffs will be high on investors' agenda and could contribute to further volatility. Investors should take advantage of near-term volatility and ensure portfolio diversification.
Investment view
We have cautioned that volatility is likely to be higher this year due to policy uncertainty and trade frictions, but we reiterate our view that the bull market is intact, and we expect US equities to end the year higher. Investors can use market swings to build long-term positions, and ensure their portfolios are well diversified.
US President Donald Trump ordered a 25% tariff imposed on all imported passenger vehicles and light trucks, effective 3 April. This will be expanded to include key auto parts (including engines, transmissions, electrical components and more) no later than 3 May.
Bloomberg reported that President Donald Trump’s coming wave of tariffs is poised to be more targeted than the barrage he has occasionally threatened. According to officials cited in the report, Trump will announce widespread reciprocal tariffs on nations or blocs but is set to exclude some.
The S&P 500 rose 2.1% on Friday on progress towards a US funding bill to avert a government shutdown through to September. US President Donald Trump over the weekend signed the bill into law. Separately, Trump said he sees a “very good chance” for a Russia-Ukraine ceasefire, with a call with Russia's Putin reportedly scheduled for Tuesday.
Did you know?
The direct impact of auto tariffs at the US equity index level appears minimal, with the ex-Tesla auto sector accounting for just 0.25% of the market.- Although the Trump administration has expressed a willingness to tolerate economic “disturbances,” recent comments also suggest some flexibility in its reciprocal tariff plans. So far, the threat of tariffs has been followed by negotiations to soften them.
- Positioning and sentiment data suggest that the long-held “US exceptionalism” view is no longer as widely held—suggesting greater scope for positive surprises.
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