CNBC Daily Open: Trump's expanded tariffs mean putting out home fires could be more expensive

The Trump administration is significantly impacting trade and technology policy, expanding 50% import tariffs to over 400 new categories, including machinery, and potentially seeking government stakes in CHIPS Act recipients like Intel, while Nvidia reportedly develops a new chip for China. This unfolds as Japan's exports saw a sharper-than-expected 2.6% decline in July, signaling weakening global demand, and technology stocks weighed on US and Asia-Pacific markets. Concurrently, UBS raised its gold forecast for 2025/2026, and the UK REIT sector is undergoing rapid consolidation, evidenced by KKR's thwarted bid for Assura amidst perceived low valuations.

Analysis

The current market landscape is heavily influenced by U.S. trade and industrial policy, creating divergent outcomes across sectors. The administration's expansion of 50% import tariffs to over 400 new product categories, including machinery and construction materials, signals a deepening protectionist stance that will likely impact supply chains and input costs. Concurrently, the implementation of the CHIPS Act introduces a significant new variable for the semiconductor industry, with recipients like Intel and Micron potentially having to grant the U.S. government equity stakes in exchange for funding, creating a risk of shareholder dilution. In contrast, Nvidia appears to be navigating these geopolitical currents more favorably, reportedly developing new chips for China following indications of potential export relaxations. This policy-driven uncertainty is set against a backdrop of weakening global economic indicators, evidenced by Japan's steeper-than-expected 2.6% year-over-year export decline in July, its sharpest fall since February 2021. Broader market sentiment reflects these headwinds, with the Nasdaq Composite falling 1.46% on tech weakness, led by a more than 9% drop in Palantir shares. In contrast, specific pockets of the market show unique activity; the UK REIT sector is undergoing rapid consolidation, highlighted by KKR's failed bid for Assura, which suggests investors now believe valuations in the sector have become excessively low. Furthermore, despite a recent stall in gold's rally, UBS has raised its 2025 and 2026 price forecasts, indicating underlying institutional confidence in the metal as a long-term hedge.

Key Decisions for Investors

• Investors should differentiate between semiconductor stocks, as CHIPS Act recipients like Intel and Micron face potential shareholder dilution from government stakes, whereas Nvidia shows potential for navigating U.S.-China trade restrictions more effectively.
• The expansion of U.S. tariffs and Japan's sharp export decline signal mounting headwinds for global trade, warranting a review of portfolio exposure to companies reliant on international supply chains and demand from China and the U.S.
• Given the thwarted KKR bid for Assura, which indicates institutional belief that UK REITs are undervalued, investors may find opportunities in the UK property sector ahead of further M&A activity.
• With rising trade tensions and UBS raising its long-term gold forecast, consider reviewing or initiating positions in gold or other safe-haven assets as a hedge against increasing geopolitical and market volatility.