Navigating market volatility amid U.S. tariff changes
Recent changes in U.S. tariffs have introduced new dynamics to the global market landscape, presenting both challenges and opportunities for investors. We’ll help you understand these developments and make informed investment decisions in this volatile environment.

New market dynamics
Recently announced U.S. tariff changes have led to heightened global market volatility. This has prompted a revisiting of strategic investment approaches as the United States moves toward a cycle of reindustrialization. The shift is an attempt to reshape global trade dynamics, with one potential impact being that China may be required to pivot toward more of a consumption-driven economic model, creating both winners and losers. In this environment, it’s possible that investments that are somewhat more aligned with U.S. domestic manufacturing and services could potentially benefit from reindustrialization. Additionally, should China respond by expediting domestic economic stimulus, it’s our opinion that Chinese consumer sectors could benefit from any shift by China toward domestic consumption. Monitoring these changes and adjusting portfolios can help capitalize on opportunities and mitigate risks from global trade realignments.
- Assess whether you believe you could benefit from increasing allocations to U.S. domestic manufacturing and service sectors that are likely to benefit from reindustrialization efforts.
- Conduct a comprehensive analysis of the Chinese consumer market to identify sectors poised for growth due to China’s shift toward a consumption-driven economy.
Navigating volatility and geopolitical considerations
A new macroeconomic and markets regime will potentially coincide with an economic rebalancing, affecting global markets and challenging export-reliant ASEAN economies. Countries such as Vietnam and Thailand may need to adjust their economic models as transshipment loopholes close. In contrast, India’s more domestically driven economy may offer relative resilience against external shocks. We believe investors could consider diversifying into economies with strong domestic demand to help mitigate geopolitical risks and potentially enhance portfolio resilience.
- Evaluate and increase exposure to economies with strong domestic demand, such as India, to help build resilience against geopolitical risks.
- Consider a strategy that reduces investments in export-reliant ASEAN regions until they adjust their economic models to the new macroeconomic regime.
- Stay informed about geopolitical developments and potential economic policy changes so that you may adjust investment strategies as you see fit.
Valuation reset
Watching sectors with historically lower valuations and reviewing credit spreads for favorable risk premiums can help uncover potential investments. A flexible approach and regular valuation assessments can align strategies with market dynamics and capitalize on emerging opportunities. While the valuations of risk assets are expected to decline, not all will do so uniformly. We’ve observed certain asset classes, such as large cap U.S. tech stocks and credit spreads, particularly investment-grade and developed-market high yield, have been among the first to experience a valuation reset, with equity valuation multiples decreasing and credit spreads widening.
- Consider monitoring investment-grade bonds for widening credit spreads.
- By maintaining a flexible investment approach, you may be more able to quickly adapt to changes in the market.
The effects on the U.S. market
Home-biased policies may cause some foreign capital to exit U.S. markets. Although domestic retail investors continue buying U.S. equities, the labor market will need to remain resilient to continue this trend. If U.S. equity valuations realign with long-term averages, significant investment opportunities may emerge for both domestic and foreign investors. We believe this realignment could provide a strategic entry point for investors looking to capitalize on more favorable valuation levels, potentially enhancing returns as market conditions stabilize.
- Considering a diversified investment strategy that includes both domestic and international opportunities may help to mitigate risks associated with home-biased policies.
- Stay vigilant about shifts in domestic retail investor behavior and job market trends that could affect investment flows into U.S. equities.
Long-term opportunities
Despite current challenges, the potential for long-term market returns is increasing as valuations reset. Consider focusing on disciplined risk management and diversification while seizing opportunities as they arise. This involves being value-sensitive and leveraging market pullbacks—without attempting to time the market perfectly in a headline-driven environment—to build resilient portfolios capable of navigating future uncertainties effectively. Maintaining a long-term perspective can help ensure strategic alignment with evolving market conditions, thereby positioning investors to potentially benefit from potential growth over time.
- Consider a diversified strategy with disciplined risk management to help navigate market uncertainties.
- Don’t be distracted by short-term headlines when you’re investing with a long-term perspective.
Important disclosures
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