蜜豆视频

We estimate that the tariffs announced on Wednesday will bring the US effective tariff rate (tariffs as a percent of US imports) up to around 25%. That鈥檚 up from 9% prior to the announcement and just 2.5% prior to the US election.

In the near term, we believe the effective tariff rates will be higher still. We believe that the EU and China are likely to retaliate, and that the 鈥渞eciprocal鈥� approach to US tariffs means that retaliation by trading partners is likely to be met with even higher US tariffs. In addition, some of the goods excluded from US tariffs in the 2 April announcement may be subject to future Section 232 investigations, which could lead to some exclusions being removed.

We are also conscious of the apparent high degree of conviction the Trump administration has in the merits of restrictive trade policies. Without President Trump taking active steps to change the policy trajectory, we are likely to enter a downside scenario, which would likely include a meaningful US recession and lower equity markets. This would represent an extraordinary policy-induced economic downturn for an economy that was in robust health less than 100 days ago.

Nonetheless, in our base case we do believe the effective tariff rate will begin to gradually decrease over a three- to six-month horizon. Various individual countries, including the UK, Switzerland, and Korea have suggested that they do not intend to retaliate and that deals with individual countries could begin to bring the overall effective tariff rate down.

Domestically, President Trump is likely to face legal, business, and political pressure to negotiate. The latest tariffs were under the aegis of the International Emergency Economic Powers Act (IEEPA). While this was invoked to place tariffs on Canada, China, and Mexico on national security, drug trafficking, and immigration grounds, it looks more open to challenge when used as the legal basis for tariffs across a far wider range of countries.

We also anticipate extensive business lobbying to water down initial tariff proposals or establish sector carve outs, especially as US companies鈥� ability to diversify supply chains is harder given the breadth of the levies. Political considerations may also lead to a softening as mid-term elections move closer into view.

We believe some potentially acceptable 鈥渙ff-ramps鈥� that could enable all sides to declare victory could include some combination of higher European defense spending, measures in Asia to prevent dumping of excess supply into global markets, reductions in existing tariff or non-tariff barriers, or measures to increase inward investment into the US.

In our base case we think that from around 25% today, effective US tariff rates will peak in the region of 25-30% and that they will be on a downward trajectory by the third quarter, ending 2025 at 10-15%.

US

We expect much slower US growth following the 2 April announcement, and in our base case we expect US GDP growth for the full year of less than 1%. This outcome could include an intra-year recession with GDP declining -1% peak-to-trough. Even heading into the latest announcement, March saw the first contraction in US manufacturing sentiment in three months and consumer spending rose by less than expected in February, and the Atlanta Fed鈥檚 GDPNow forecast for first-quarter growth (gold-adjusted) is currently running at -0.8%.

On inflation, we would estimate that the tariffs announced so far under the new administration might add around 2 percentage points to US consumer prices by the end of the year, assuming only a partial pass-through to end consumers. Although higher inflation will present a challenge for the Federal Reserve, we believe much slower growth and likely weakness in the labor market will mean that the Fed will nonetheless deliver 75-100bps of rate cuts over the remainder of 2025.

Europe

We believe European growth will also slow, though by less than US growth. If tariffs hold at their current levels through the summer, growth could be some 50-100bps lower compared to a situation where tariffs are dialed back. As for inflation, retaliatory tariffs by the EU could see price pressures rise in the short term, but we believe the medium-term impact of a trade war is likely to be disinflationary for Europe. Combined with weaker growth, this may be enough to cause the European Central Bank to cut rates beyond the 2% we had expected by June.

For Switzerland, the impact of tariffs will likely come mostly through Eurozone economic weakness. For now, pharmaceutical products, which represent 50% of Swiss exports to the US, are excluded from the new tariffs, mitigating the direct impact of these tariffs on the Swiss economy. But a halving of European growth could cost 0.5 percentage points of Swiss growth compared to the original estimate of 1.5% for 2025. Meanwhile, a sharp appreciation of the Swiss franc could also open the door for a rate cut by the Swiss National Bank, bringing the policy rate to 0%.

Asia

For Asia, we believe growth overall could fall to 4.0% or lower in 2025, down from around 5.1% last year, with the trade-driven economies of North Asia, Thailand, Malaysia, and Singapore most susceptible.

The direct tariff impact on Asian growth could be upwards of 50bps, while for every 100bps reduction in US growth, Asia鈥檚 trade-oriented open economies like Singapore, Malaysia, Thailand, Taiwan, and South Korea could see their own GDP reduced by 2 percentage points. Domestically driven economies such as India, Indonesia and the Philippines may see a more muted 100bps hit.

US equities

We move to a Neutral stance on US equities from Attractive.

In the near term, we expect markets to be particularly volatile amid potential tit-for-tat escalation in tariffs, Section 232 investigations, which could lead to further US tariffs, and likely consensus earnings and economic downgrades. Tariffs are also going to be a major talking point in the first-quarter earnings season, starting later this month.

In our base case we expect markets to partially recover by year-end, but we reduce our December 2025 target on the S&P 500 to 5,800 from 6,400. We have cut our 2025 earnings per share (EPS) estimate from USD 265 to USD 250, and our target year-end P/E multiple for the S&P 500 from 21.5x to 20.0x.

Higher tariffs and lower growth will mean pressure on US corporate earnings, while continued uncertainty, weakening economic data, and the Trump administration鈥檚 apparent willingness to tolerate economic downside will mean that risk premia are likely to stay elevated.

At a sector level, we move our view on the US technology sector and on the AI TRIO to Attractive (from Most Attractive). While we still believe the secular fundamentals of the AI technology cycle are intact, we believe the uncertainty introduced by the tariffs may pose some near- to intermediate-term headwinds.

The average stock in our AI portfolio has sold off by -2.0% over the week prior to, and a further -6.5% in the day following, the Trump administration鈥檚 tariff announcement. Although it is tempting to say the market has quickly priced in tariff impacts, we see further risks over the near to intermediate term.

First, the Trump administration did not include semiconductors in this initial round, but did leave open the potential for tariffs on chips to be applied under the authority of Section 232. Second, we expect most management teams in the IT sector to temper analyst expectations during the first quarter earnings season, especially because even the largest companies may be more measured in their AI investments in light of slower growth in their core businesses. And third, we think P/E multiples across the IT sector may be capped in the near term amid heightened economic uncertainty.

We also downgrade our view on the US consumer discretionary sector to Neutral from Attractive. The sector is likely to face direct impacts from higher tariffs (owing to higher import costs) and may struggle to pass on tariff costs to consumers against the backdrop of a weakening domestic economy and labor market.

Ex-US equities

We continue to hold a Neutral view on European equities, but lower our EuroStoxx 50 index target for year-end to 5,200 from 5,700, reflecting the weaker earnings growth outlook and elevated uncertainty. We push out our expectations for the European earnings recovery and lower our earnings growth estimate for this year from 5% to 0%. While we are monitoring for potential entry points, for now, we recommend selectivity, favoring beneficiaries of increased fiscal spending and small- to mid-cap stocks in Europe.

We also remain Neutral on China, given the negative economic impact of the US tariffs and potential retaliation. In the face of the potential volatility in the months to come, we recommend Asia-focused investors position in select state-owned enterprise (SOE) sectors, and stocks with high dividend yields in the financial, telecom, utilities, and energy sectors. Attractive yields should help stabilize portfolio returns in volatile markets.

Taiwan is among our preferred markets in the region, given attractive structural growth prospects, though we downgrade our view to Attractive from Most Attractive. The substantial headline 32% tariff (24% excluding semis and pharma), and uncertainty around potential semiconductor tariffs remains high, will likely prolong market volatility, and delay recovery.

Taiwan equities have already corrected approximately 7-10% year to date, partially pricing in some risks. However, further downside risks remain, given uncertainty about semiconductor tariffs, potential capex delays amid a slowing growth environment, and potential downward earnings revisions. Potential short-term concessions from Taiwan's government to the US could provide temporary support, but sustained recovery may take longer to materialize. Current valuations are in line with historical averages and a 14% discount to the MSCI ACWI, but uncertainty and slower growth pressures could weigh further on multiples.

Bonds

We continue to rate quality bonds as Attractive. We believe consensus growth expectations are likely to come down in the weeks ahead, a trend which should be supportive of quality bonds.

Nevertheless, we believe their appeal may increasingly lie in their portfolio diversification benefits than in their absolute return prospects in our base case. With inflation also likely to rise sharply in the near term, we believe bond markets may be reticent to price a significant rate-cutting cycle for the Fed. Bonds at the longer end of the yield curve may also price potential risks of a Fed policy mistake if it chooses to cut interest rates while inflation is rising and risks de-anchoring inflation expectations.

In our base case, we forecast a yield of 4.0% on the US 10-year Treasury by year-end (from 4.06% at the time of writing).

Meanwhile, high yield spreads have significantly widened and are likely to remain sensitive to ongoing concerns on the US growth trajectory. In the near term, as markets digest a potentially significant period of weakness for the US and global economy, a rebuild in the credit risk premium could see US HY spreads widen to above 400bps (from 342bps today).

Currencies and commodities

The US dollar has weakened substantially since the latest tariffs were announced.

In isolation, tariffs should be dollar positive, and the US dollar has also traditionally rallied during risk-off periods. However, we believe this effect is being more than offset by lower-than-expected tariffs on Mexico and Canada, sharper consensus downgrades to US growth and rate expectations than in other regions, diversification flows away from dollar assets because of the political uncertainty, and investors beginning to price potential retaliation from the EU and China.

In the months ahead, we broadly expect the dollar to trade in a range as pro- and anti-dollar forces offset one another. Longer-term weakness in the USD could arise if downside risks to the growth outlook are accompanied by sharper-than-expected Fed rate cuts.

Meanwhile, we expect gold, now above USD 3,100/oz, to continue serving as a hedge against geopolitical and inflation risks. We target USD 3,200/oz by year-end in our base case but note that the metal could trade even higher in the event of tariffs staying in place longer than expected.

There are clearly a wide range of potential outcomes around the base case view expressed above.

While we assign a 50% probability to our base case scenario, a downside scenario (30% probability) could see a more significant period of tit-for-tat escalation in the near term and/or effective tariffs failing to fall meaningfully over the balance of 2025.

An upside scenario (20% probability) would involve relative restraint in new tariffs in the near term, followed by a readiness on all sides to achieve 鈥渜uick wins鈥� to bring tariffs down from the announced levels.

At times of heightened uncertainty and elevated volatility, there are three strategies investors can pursue, depending on their risk appetite: managing volatility, looking through volatility, and taking advantage of volatility.

We believe that investors should consider a combination of all three and that there are opportunities to do each in the current market.

Managing volatility

Navigate political risks. We believe that trade and geopolitical uncertainty, as well as rising risks to global growth, will continue to spur demand for gold among private and institutional investors. We expect gold, now above USD 3,100/oz, to continue serving as an effective hedge against geopolitical and inflation risks.

In equities, higher volatility has made capital preservation strategies more expensive to implement, but they can still be effective means of limiting potential portfolio losses while maintaining exposure to potential gains. Extending the tenor of such strategies can help improve cost-effectiveness.

Seek durable income. While there is now less potential upside for quality bonds in our base case, as bond markets have already begun to price slower economic growth, we believe that high grade and investment grade bonds continue to offer attractive risk-reward and that they are particularly attractive as portfolio diversifiers. We would expect substantial upside for quality bonds in the event of a deep recession in the US, which could hurt other parts of investor portfolios.

Diversify with alternatives. Given the increasingly complex investment landscape, diversifying with alternatives is becoming essential. By dynamically adapting to macro shifts, sector rotations, and geopolitical developments, hedge fund strategies like discretionary macro, equity market neutral, select relative-value or multi-strategy can cushion portfolios in down markets and capitalize on dislocations. Their flexibility to hedge in real time, selectively deploy leverage, and exploit pricing anomalies translates into opportunities for asymmetric returns that traditional assets might miss.

Looking through volatility

TRIOS. We continue to see strong long-term potential in our Transformational Innovation Opportunities (TRIO)鈥擜rtificial intelligence, Longevity, and Power and Resources. Nonetheless, companies exposed to each of these ideas could get caught up in near-term derisking. While we expect structural trends to be the biggest drivers over the long term, in the near term, factors like trade tariffs and economic weakness can lead to volatility.

Investors with a longer-term horizon or a tolerance for heightened near-term volatility should consider adding exposure to AI (including in China), Longevity, or Power and Resources through buying high-quality stocks or through structured products.

Go long longevity. Our most recently launched TRIO is Longevity. In the near term, the US health care sector, where the Longevity topic has the highest exposure, may suffer less than more growth-sensitive sectors from economic concerns. We also expect clearer policies and positive developments, such as updates to government health care programs, to support stocks over our tactical investment horizon. Over the longer term, as people live longer, wealthier, and healthier lives, we anticipate a growing demand for products that extend healthy lifespans.

Taking advantage of volatility

In equities, high uncertainty related to tariffs and economic developments makes timing market entry difficult. But at current levels, we believe investors should consider monetizing currently high levels of equity volatility with yield-generating strategies. Single stock volatility has risen by an even greater margin than index level volatility, suggesting greater scope for yield-generation. Meanwhile, we believe S&P 500 levels between 5,000 and 5,250 would represent attractive entry points in our base case.

In fixed income, we believe it may be premature to 鈥渂uy the dip鈥� in riskier credits, given the uncertainty about the economic outlook. Nonetheless, investors with a longer-term perspective may consider capitalizing on dislocations that could materialize in the coming weeks. We retain a constructive stance on select BB-rated issuers we consider rising star candidates, as well as on select subordinated/hybrid bonds.

In currencies, we believe that investors can benefit from currently elevated levels of currency volatility by trading what we expect to be near-term ranges in key pairs, including EURUSD (centered around 1.10), USDCHF (centered around 0.87), and GBPUSD (centered around 1.31).

In assessing the tariff impact on individual countries, it is important to consider the difference between the 鈥漢eadline鈥� tariff rates and the 鈥渆ffective鈥� tariff rates, once we account for exemptions. We also need to consider existing tariff rates, which the tariffs announced on 2 April generally 鈥渟tack鈥� on top of.

The below table includes a breakdown of pre-2 April tariffs, 鈥渉eadline鈥� announcements, adjustments for exemptions, and the 鈥渘ew鈥� effective tariff rate. It includes a focus on Asia. Announced tariffs on Asia went further than expected, while proving lesser-than-expected on Canada and Mexico. This could suggest that the Trump administration is pursuing a 鈥淔ortress North America鈥� strategy, which could keep the pressure on individual European and Asian economies high.