蜜豆视频

Video: CIO Monthly: How investors can prepare for Trump 2.0 (4:04)

Video:Transformational innovation opportunities (TRIOs): AI, power and resources (1:52)

In a wide-ranging video address made to global business and political leaders at the World Economic Forum in Davos on Thursday, US President Donald Trump reiterated his threat to use tariffs to bring manufacturing back to the US. He told European executives that if they don鈥檛 make their products in the US, 鈥渢hen, very simply, [they] will have to pay a tariff.鈥�

Earlier this week, Trump said the European Union should be prepared for tariffs, after threatening 25% tariffs on Canada and Mexico and 10% levies on China starting 1 February.

Tariffs are top of mind for many investors because it is the area where the president has the most unilateral authority to alter the market consensus around continued growth and receding inflation.

While the scope and severity of possible tariff outcomes remains uncertain, we lay out our latest tariff scenarios, consider how they may affect our broader investment scenarios for the year ahead, and address the implications for investors.

We group the potential outcomes on tariffs into the following four scenarios:

Aggressive (50% probability): The US effective tariff rate on China rises to 30%, primarily on industrial and capital goods, stepped up over time from the current 11%. China retaliates, but the impact on the US economy is limited given the relatively low level of US exports to China. Retaliation could include sanctions of US companies, allowing the Chinese yuan to weaken, and limits on critical minerals exports. The US pursues efforts to protect and promote US technology interests, including critical minerals. The US focuses on Rules of Origin to limit transshipments of goods through Vietnam, Mexico, and elsewhere. The US imposes tariffs on EU autos (including EVs). The EU retaliates.

Highly aggressive (25%): Universal tariffs of 10-20% are imposed on all US imports, with a higher 60% rate on Chinese goods, and/or high (e.g., 25%), broad, and sustained tariffs on Canada and Mexico. Court challenges against the use of presidential authority to impose universal tariffs fail. Retaliation occurs globally.

Limited (15%): The US delays action against China and revisits the Phase 1 trade deal negotiated during Trump鈥檚 first term. Some export restrictions and product-based tariffs are imposed on technology goods and items important to economic and national security. The US pursues a policy of 鈥渆scalate to de-escalate鈥� with USMCA countries and other allies, with most issues resolved without sustained tariffs. The USMCA is reviewed in 2026.

Benign (10%): The US reaches a deal with China with a reliance on purchase quotas and otherwise uses very limited tariffs to achieve balanced trade.

These tariff scenarios are a key determinant in our broader investment scenarios. We believe the most likely outcome (50% probability) is for solid economic growth despite tariffs. US growth momentum is currently strong, we continue to believe the Federal Reserve will cut interest rates by 50bps in 2025, and we see a limited overall macroeconomic impact from an effective tariff rate of 30% on direct imports from China.

For investors, we believe that the risk-reward for equities is attractive, although near-term tariff-related volatility is likely. We expect around 8% upside for US stocks over the balance of 2025 thanks to robust economic growth, AI tailwinds, and gradually falling yields.

We also view the outlook for high grade and investment grade bonds as positive. In our base case, we expect the 10-year Treasury yield to fall to 4.0% by the end of 2025 as growth and inflation gradually slow, and as the Fed cuts rates. Additionally, we see upside to gold, and we reemphasize the importance of diversification.

Read more in the latest Monthly Letter, 鈥淧repare for Trump 2.0.鈥�