Capital Ideas Podcast Tariff impacts on global markets
May 1, 2025
Jody Jonsson and Chit Purani, both Capital Group portfolio managers, dissect the impacts of rising tariffs on global markets. Jody provides insights on equity market volatility, stressing the importance of diversification and long-term strategies amid trade tensions. Chit discusses fixed income strategies, focusing on interest rate duration and credit quality for portfolio resilience. They share valuable lessons from past economic downturns, emphasizing adaptability and patience for investors navigating uncertain times.
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Fundamental Global Restructuring
- The current tariff and geopolitical conflicts signify a fundamental restructuring of the global order uncertain since World War II.
- This creates higher uncertainty, higher discount rates, especially affecting U.S. market valuations disproportionately.
Tariff Impact on Growth
- Tariffs are expected to decelerate U.S. growth by reducing business investment and consumer spending.
- Long-term effects could force economies like China and Europe to shift towards domestic investment and consumption.
Long-Term Focus on U.S.-China Split
- Focus on the U.S.-China conflict as the core economic problem causing bifurcation.
- Examine company supply chains deeply to understand differentiated impacts across sectors.