Your Portfolio During a Trade War

Trade Wars in The News

Anyone who has checked the news once in the past month knows that America is on the precipice of a trade war. From the stock market’s point of view, the war has already begun. The NASDAQ took a sharp hit on May 5th due to news that this trade war threatened to more than double tariffs on Chinese goods. Since this hit, the market has only continued to suffer.

What This Trade War Means for Your Portfolio

It is safe to say that if you are in the market, your portfolio may have taken a hit recently. How big a hit varies greatly depending upon where your investments lie. Do your investments involve the European auto industry? If so, this could be the beginning of a sharp decline as this new trade policy targets European auto tariffs. Do your assets depend on the technology sector’s performance? Proposed tariffs are designed to shortcut China’s technological advancement so you may be hit harder than others. Are your investments tied up in American power and utility stocks? Then you have much less to worry about. In times of trade war uncertainty, defensive investors pour their funds into assets such as these since their companies have very little involvement in U.S. – Chinese tariffs.

What To Look Out For During This Trade War

By the end of this trade war, the stock market will have been effected in two opposing ways. As we’ve seen, the ongoing threat of increased tariffs will continue to negatively impact certain areas of the stock market, creating unpredictable chain effects. As news on this continues to develop, more hits will be taken until a trade deal is reached. Once the deal is in place, volatility will decrease and the stock market will recover as investors will finally know what to expect. The question is: How long will it take before a trade agreement is reached? Experts say to buckle in for the long haul as the most recent rounds of talks between the U.S. and China have concluded with no deal in sight. As of the time of writing this article, no future talks have been scheduled.

What You Should Do Next

As I said previously, there is no end in sight to this trade war and by extension this market volatility. The best thing you can do is consult your financial advisor regarding your current investments. If you don’t currently have an advisor, click here to find one. Your investments may be in the line of fire of these tariffs. Your advisor may recommend you move more assets to cash or gold backed funds, change your investment vehicle, or recommend you buckle in and not touch your investments until the dust has settled. Only your advisor can make that call. Above all, in uncertain times such as these, never make emotional investment decisions!