Global markets are facing renewed turbulence as U.S.-China trade tensions escalate, with President Trump announcing 100% tariffs on Chinese imports effective November 1, 2025, in response to Beijing’s expanded export controls on rare earth elements.
These tariffs, which now average 58%, represent historic trade barriers and have contributed to rising inflation pressures. Rare earth restrictions, critical to industries like semiconductors, auto manufacturing, and aerospace & defense, are adding supply chain risks, though CFRA remains optimistic about the semiconductors and aerospace sectors. Equity markets are experiencing stretched valuations, with the S&P 500 trading at a 41% premium to historical averages, and equity risk premiums at a 20-year low, signaling potential near-term volatility and a possible 5%-10% correction.
In his latest Macro Research report, "Liberation Groundhog Day," Paul Beland, CFA, CFRA Global Head of Research, delivers a compelling analysis that explores:
- Global markets remain unsettled due to escalating U.S.-China trade tensions, with new 100% tariffs on Chinese imports starting November 1, 2025.
- CFRA expects a U.S.-China trade deal by early 2026 covering trade, technology, and tariffs.
- Near-term equity market volatility is likely, but longer-term fundamentals support the ongoing bull market.
- Stretched valuations and low equity risk premiums could lead to a 5%-10% market decline if tensions persist.
Access the full research by completing the form.