Wells Fargo analyzes two 2025 tariff scenarios: limited tariffs with flexibility vs widespread tariffs

From Investing.com: 2024-08-04 04:31:04

Analysts at Wells Fargo have analyzed the potential impacts of tariffs in the context of the 2024 presidential campaign, with focus on two scenarios for 2025. Scenario 1 involves limited tariffs, providing flexibility in the supply chain by shifting sourcing to avoid tariffs. Scenario 2 entails widespread tariffs, leading to economic disruption and inflation.

Wells Fargo expects tariffs to initially contribute to inflation, leading to higher interest rates and a potential economic slowdown. The impact will depend on how companies and consumers adjust to the new trade environment. Therefore, a cautious investment approach is recommended, focusing on quality investments in domestic companies with strong balance sheets.

Under an aggressive tariff regime, speculative sectors like Consumer Discretionary, high-yield bonds, and small-cap equities are expected to be vulnerable. The emphasis on national security and industrial policy may lead to long-term shifts in trade practices, highlighting the importance of a strategic and diversified investment portfolio.



Read more at Investing.com: Two possible tariff scenarios for 2025: Wells Fargo By Investing.com