Tariff Threats Become Reality, Add 6 ETFs To Your Arsenal

After months of rhetorical tariff threats between Washington and Beijing, the world’s two largest economies have called a trade war. This is especially true as Trump’s 25% tariff threats on $34 billion in Chinese goods including auto, electric cars, aerospace, communications tech, new materials, and robotics went into reality at 12:01 a.m. on Jul 6 and another $16 billion are expected to go into effect in two weeks.

The tariff came in response to the alleged theft of U.S. intellectual property and unfairly swelling America’s trade deficit.

China also hit back with the same scale and strength slapping levies on American goods targeting heartland staples like soybeans, corn, pork, and poultry. The United States has violated World Trade Organization rules and ignited the largest trade war in economic history,” China’s Commerce Ministry said in a statement. With retaliation from Beijing, Trump will now seek to impose additional tariffs on $500 billion in Chinese goods.

The latest move marked the escalation of the trade war from a threat to reality and would result in a global recession. It would hurt global supply chains, increase costs for businesses and consumers and slow down investments.

Market Impact

If the situation worsens and turns out to be a full-blown trade war, it would bring disaster for the global stock markets, at least in the near term. Worries over trade are not limited to Beijing by any means though. A number of Asian stocks stand to lose a great deal in an escalating U.S.-China trade dispute. In fact, Asian shares logged in the worst first-half performance in five years while China’s mainland stock market entered into a bear territory, falling more than 20% from the February highs.

Europe, Mexico, and Canada will also bear the brunt as these have already retaliated or have some countermeasures in place against the recent U.S. tariffs on steel and aluminum.  

Against such a backdrop, there are a few places where investors can stash their cash in the ETF world. Below, we highlight five ETFs that look to offer up stability or even profit as the trade tariff crisis continues to unfold:

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