Global trade tensions are rising amid the Trump administration's imposition of steel, aluminum and tariffs. What implications will this have on investors?
In the year’s first Macro Monthly we highlighted three main risks for 2018: accelerating inflation and more aggressive monetary tightening, increased protectionism, and a sharp economic slowdown in China. Last month we discussed how the first of these risks had become more of a concern, and indeed the sharp rise in US Treasury yields played a central role in the abrupt pick-up in market volatility earlier this year. This month we take up the second key risk, trade protectionism, which has also risen in importance to global investors. Specifically we examine recent developments in trade policy, potential paths for escalation or diffusion, and implications for asset allocation.