Casualties of the Trade War

Brian Smedley, head of the Macroeconomic and Investment Research Group, shares insights on the impact trade policy has on U.S. and global economic growth potential.

October 18, 2019

Key Takeaways:

Trade war uncertainty has significant implications for the U.S. economy, not least because tariffs increase prices for consumers.
Trade war escalation has resulted in U.S. dollar appreciation, which tends to have a deflationary effect that can partially offset consumer price increases.
Trade war developments affect markets differently, but is generally negative for stocks, commodities, and corporate bonds, and positive for Treasurys.
The Fed is likely to try to combat any slowdown in the U.S. economy as a result of the trade war with more easing.
Coupled with the uncertainty likely to result in the 2020 election cycle, we believe investors should focus on capital preservation.

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