Trump’s trade tariff plans should incite investors to review portfolios
President Trump’s threats on trade are placing him on the wrong side of history, and as such, investors should consider rebalancing their portfolios.
Global stock markets have come under intense pressure at fears of mounting trade tensions between the U.S. and China – the world’s largest and second largest economies – and how worldwide economic growth and corporate earnings will be affected.
As I was quoted by USA Today and The Express, Mr Trump confirmed tariffs on up to $60 billion in annual Chinese imports on Thursday. The president said that China has to pay for decades of unfairly obtaining American intellectual property. Beijing today announced plans to enforce levies on 128 U.S. products, representing around $3 billion in imports.
Indeed, by imposing tariffs and opposing free trade and globalisation, President Trump is, in effect, making an entirely needless trade war that will be damaging to the U.S. and global economies. It seems as though he’s intent on pulling the country back to a time that no longer exists.
Globalisation in trade and commerce is here, it’s here to stay, and is likely to only gain momentum in the years to come. Globalisation is advancing, whether the U.S. is behind it or not.
If applied in the right way, globalisation encourages free trade, which in turn encourages global economic growth, generates employment, makes businesses more competitive and decreases prices for consumers.
What Mr Trump’s tariff plans have done is create uncertainty and place global stock markets under pressure.
As such, I would advise investors to review their portfolios to make sure they are sufficiently diversified across asset classes, geographical regions and sectors. Portfolio diversification is key in order to sidestep risk and make the most of the inevitable opportunities that stints of volatility present.
Over the longer-term, equity investment is recognised worldwide as one of the optimum ways to accumulate wealth.
Indeed, see-sawing markets provide a chance for investors to place new money into markets at lower prices. A slump in the market quite often signifies that there are high quality equities available at more attractive prices.
Naturally, nobody knows with absolute certainty what will happen in the immediate future, but stock markets typically go up over the long-term.
Therefore, with the likelihood of a trump-induced trade war hotting up, investors should evaluate their portfolios to ensure they are still on the right track to reach their long-term financial objectives.