Trump’s tariff was never the real issue. All the ridiculing by various governments have already exposed that they are more concerned about how long this will last rather than it being a permanent problem. After all, this is a man made crisis. Therefore, its fear factor, no doubt initiated by the most powerful economy in the world, has only limited impacts on the market. That said, another real issue still persists and no, the problem is not caused solely by US but by the world. Apologies in advance for the pessimism, but I just feel that it should be recorded in this site for posterity and let me be clear, I hope I am wrong about this.

Distrust between international governments are at all time highs

It is true that governments will still need the US market for their growth but since Trump is still in his first year in this term, they have no choice but to brace of further chaos by the Trump Administration in the next few years. This will result in nations trying to rekindle or strengthen ties with other nations that are willing to unite during this time. However, this optimism will soon dissipate. The reason why is simple, there is no way to fill the void for the loss in GDP from trading with the US for even 1-3 months. This loss will still result in struggling or collapsed businesses in their own purview. As such, investors all over the world should brace of a recession resulting in a market selloff in second half of 2025.

Trade issues are exposed and will only worsen

Contrary to what Trump has said about trade deficits, those aren’t the biggest issues faced by nations, it is actually the long term neglect on ensuring every countries own competitiveness that will ultimately lead to widespread unemployment. Especially in lower tech industries, the amount of unemployment will drastically increase this year and governments will have no choice but to resort to heighten protectionist policies to appease their workforce. This is largely due to the potential dumping from China as their production surplus will be unleashed on every market that is willing to take them in, causing widespread price reductions and over supplies world wide. At first, businesses that start the ball rolling will sell things at despicable prices but after demand simmers even with extremely low prices, manufacturers will also start closing down causing widespread panic and distress.

What should we do?

There is a high chance that our investments are all in the red even right now. Apart from long term US investors who will be stubbornly optimistic until they are in the same plight. I urge investors to start shaving their holdings as long as they are still profitable and wait for discounts in the later half of the year. At the same time, value hunting is still going to be a good choice if you are into value investing as many cash rich companies might opt for a delisting if they are tired of the current geopolitical landscape that is set to last.

Closing Thoughts

Sometimes being pessimistic is a good way to brace for impact. Time to relook into value investing and stray away from growth companies at least for the next 6 months. They are overpriced and you know it. Don’t pay up for future value when the future is obviously bleak at least for the next few years. No investors are loyal to losses, not to mention that hedge funds are using high growth companies as their store of value if you know what I mean.