The 2018–2019 U.S.-China trade conflict underscored how tariff uncertainty can dampen sentiment, depressing valuations even if the earnings impact turns out to be modest. Given an unusually wide range of potential tariff outcomes, what approach should investors take?

• 2018 saw significant market volatility driven by the U.S.-China trade war, with worsening sentiment denting valuation multiples despite relatively stable earnings.
• Central banks face a difficult balancing act in responding to potential tariff shocks, needing to manage inflation and economic growth.
• While markets have been relatively resilient, elevated equity valuations and low credit risk premiums suggest potential vulnerability if trade tensions escalate sharply.

 

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If you have any questions or need further guidance, please do not hesitate to contact me.

 

Beth Arseneau, FMA, CIM
Portfolio Manager
416-960-4592
beth.arseneau@rbc.com