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How To Think About And Defend Our Portfolios Against A Trade War

Gary Bourgeault profile picture
Gary Bourgeault


  • A trade war is a very real possibility we can't afford to ignore.
  • The main consideration in determining winning and losing stocks.
  • How to defend our portfolios and grow them at the same time in a trade war environment.

Source: Red State

With the announcement by President Trump that he was going to impose tariffs on all imported aluminum and some steel, it suggests this could be the beginning of a trade war that investors need to understand in regard to implications to their portfolios over the next few years.

Initial plans are to impose a tariff of 25 percent on steel imports and a 10 percent tariff on aluminum imports. It remains to be seen if there will be some exemptions to the tariffs or they'll blanket the entirety of foreign markets. Another issue is whether or not specific products may enjoy exemptions.

Contrary to some headlines, the reality is China, which only accounts for approximately 2 percent of U.S. steel imports, won't be affected much. On the other hand, countries like Brazil, Canada, Mexico and South Korea would be hit much harder. All of them have asserted they will retaliate if tariffs are enacted on steel and aluminum. The EU is another trading partner that have vowed to retaliate.

What needs to be weighed by investors is what the implications of this would be to our portfolios if a trade war does break out, and what the best ways to defend against it while continuing to build our wealth.

The possibility of a trade war is real

The first thing is to not assume there won't be a trade war; it's a very real possibility, with the caveat it'll probably be targeted at certain companies or products, rather than entire markets. In other words, it's unlikely to be at the expansive level President Trump may impose on steel and aluminum.

In watching the president since he took office, it's not in his nature to back down from public policy statements he makes, so it should be taken as a

This article was written by

Gary Bourgeault profile picture
I am a former investment advisor and owner of several businesses. These days I invest only for myself while continuing to write on a variety of financial and economic topics.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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