Trade Deals Don't Mean the End of Tariffs, Amundi's Yao Says

Amundi Investment Institute's Aidan Yao asserts that despite market optimism surrounding trade deals, the Trump administration will likely continue employing sectoral tariffs as a strategic tool to extract concessions. This indicates that the use of trade levies will persist, even with new agreements, suggesting ongoing trade policy as a leverage point.

Analysis

According to Aidan Yao of Amundi Investment Institute, recent market optimism surrounding new trade agreements may be premature. The core assertion is that the Trump administration is expected to continue leveraging sectoral tariffs as a primary tool for extracting concessions in trade negotiations. This suggests that while broad trade deals may be signed, the strategic use of targeted trade levies will persist, creating an environment of ongoing policy uncertainty. Consequently, the resolution of one trade dispute does not signify the end of tariff-related risks, and investors should anticipate continued volatility in sectors vulnerable to sudden shifts in U.S. trade policy. This cautious outlook contrasts with the market's initial positive reaction to deal-making, highlighting a potential disconnect between headline sentiment and underlying policy risk.

Key Decisions for Investors

• Investors should exercise caution and avoid over-allocating based on positive trade deal headlines, as the underlying threat of sectoral tariffs remains a key policy tool.
• It is prudent to review portfolio exposure to industries with sensitive global supply chains, such as manufacturing and technology, which are most vulnerable to targeted tariff actions.
• Continue to actively monitor US trade policy announcements for specific sectoral threats, as this remains a primary source of potential market volatility.