I almost feel out of breath trying to keep up with the flip-flopping of US trade policy over the last six weeks. Even Trump’s Trade Representative Jamieson Greer was caught off guard by the president. According to the US government website, the role serves as the president's trade advisor, negotiator, and spokesperson on trade issues. However, Trump would rather take the credit and make himself look like the market saviour.
From steel to champagne
In March, Trump threatened sweeping tariffs from steel to champagne after having granted a 1-month reprieve at the start of the month. After a reasonable start to the year, the S&P 500 was down c.3.5% along with other major indices. Expectations were that the effective tariff rate – the percentage of the total value of all imports – was going to be around 15%. Following Liberation Day on April 2, which was touted as the day Trump was going to Make America Wealthy Again, the effective rate is estimated at 23% but this number seems to be increasing every day. At time of writing, the US and China have 125% tariffs on each other’s goods and neither side is showing signs of backing down.
Under a Trump presidency, communications from the White House are difficult to predict so we have been reducing risk. Equities across our funds are towards the bottom end of the range we allow for each strategy. We are wary of the US, however when it comes to sustainable investing it is the market with the most opportunity. When considering tariff impact, the pain is felt globally so simply reducing our US equity weighting to zero wouldn’t help performance and would certainly hinder it in the long run. I recently spoke to the Financial Times regarding Trump’s perceived impact on the sustainability sector and how investors might be wrongly convinced that he is causing problems for the sector.
Author
Harry Gibbon
Investment ManagerHarry joined Quilter Cheviot‘s internship programme in May 2018 and moved to work with Claudia Quiroz and Caroline Langley later that year. He has since been promoted to an Investment Manager and assists with the management of clients’ portfolios for private clients, pensions, trusts, charities and funds, including the Climate Assets Funds.
Harry is a Member of the Chartered Institute of Securities and Investments and he has completed the CISI Chartered Wealth Management qualification and the CFA Certificate in ESG Investing.
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The Climate Asset Funds invests in companies that make a positive contribution to the world, with a strong underpinning of ethical values.