, Columnist
U.S. Stocks Would Bear the Brunt of a Trade War
The economy would do better by expanding markets than by restricting imports.
Sanctions on China may be a mistake.
Photographer: Mark Wilson/Getty ImagesTrade-related topics that had been a sleeper have become a front-burner issue for investors. Equity prices and Treasury yields plunged March 23 after the U.S. announcement of a 25 percent tariff on up to $60 billion of Chinese exports. Over that weekend, both sides expressed interest in reconciling differences and markets reversed path when they opened March 26.
If a global trade war erupts, investors should allocate more of their assets to Treasury securities that are likely to experience a further decline in yields. Equities, meanwhile, would bear the brunt of the impact of tit-for-tat trade moves by the U.S. and its major trade partners.