U.S. and China Face Off Amidst Tariff Uncertainty

LPL’s Chief Economist, Dr. Jeffrey Roach, discusses tariff implications, pressures facing the U.S. and China, and still elevated yields.

Last Edited by: LPL Research

Last Updated: April 09, 2025

Transcript

Jeffrey Roach (00:03):

Hi, I'm Jeffrey Roach, Chief Economist for LPL Financial, with three key charts to explain the current macro landscape. First, protecting USMCA is the key for the outlook. Now, investors have not liked the new trade policy revealed on April 2. The actual calculation of country specific tariffs is definitely suspect, but I want to focus on the key players within U.S. imports. Roughly 28% of all goods imported into this country comes from Mexico and Canada. For investors, thinking about the impacts from new trade policy, one very important factor for the economic outlook is how well the U.S. Mexico and Canadian trade agreement can stay immune to the brunt of the new tariff regime. Second, China relies on critical U.S. products, so who's going to blink first? As of this recording, the U.S. and China are on the cusp of a trade war. And if we are to analyze who's going to concede, first, we have to identify who has the most risk to their country.

Jeffrey Roach (01:04):

The U.S. is the top provider for important items that China needs, and it's possible that China needs the U.S. more than the U.S. needs China. This is indeed a dangerous game since both countries will feel the stress, but we think China may feel the greater pressure. Third, higher yields from stagflation roil plans. One of Treasury Secretary Scott Bessent's goals is to help relieve some pressure in the fixed income markets and get yields lower, not necessarily by Fed rate cuts, but by better fiscal policies like deregulation, deficit reduction, and energy cost management. Now, in the near term, bond markets are focusing primarily on the inflationary risks from tariffs. Yields will stay elevated as long as markets think businesses will be successful in passing along higher costs to consumers. Well, that's all for now. If you want more insights on global market trends, follow us on social media and take care.

LPL’s Chief Economist, Dr. Jeffrey Roach, discusses tariff implications, pressures facing the U.S. and China, and still elevated yields.

Tune In Now

You can find Econ Market Minute on the LPL Research YouTube channel and Apple Podcasts.

Keep Up With Market Insights

LPL Research brings the market directly to you with a publication lineup that moves as quickly as the market. Drill down into the details with daily and weekly commentary.

Stay in the Know

Weekly Market Commentary

Get your weekly recap of the stock market, the Fed and everything else in between, in this weekly publication — an LPL fav. Learn what the research team has to say.

Get your Weekly Recap

Macro. Market. Movers.

Read the hottest topics of the day from LPL Research’s thought leaders. From stocks and bonds, the latest data from the government, and everything else.

Visit the LPL Research Blog

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Stock investing includes risks, including fluctuating prices and loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.

The Bloomberg U.S. Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

All index data is from FactSet or Bloomberg.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency

Not Bank/Credit Union Guaranteed

Not Bank/Credit Union Deposits or Obligations

May Lose Value

RES-0003764-0325 | For Public Use | Tracking #723248 (Exp. 04/26)