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Opinion: How Trump’s trade war could become a $16 trillion problem for U.S. companies - MarketWatch

1. U.S. trade deficit reached $1.2 trillion in 2024, signaling economic tension. 2. U.S. surpluses in services and investments could insulate from tariffs. 3. Trump's focus on goods trade overlooks critical service-based economic strengths. 4. Potential IP protection erosion could harm U.S. tech and pharmaceutical sectors. 5. Retaliation targets may shift toward U.S. investments abroad, not just exports.

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Why Bearish?

The article suggests that ongoing trade tensions and potential retaliatory measures may negatively impact investor sentiment towards S&P 500 companies, especially in sectors reliant on IP and services. Historical examples, like the 2018 trade tension with China, showed increased volatility in equity markets, including S&P 500 fluctuations due to retaliatory tariffs.

How important is it?

The article highlights significant economic concerns regarding trade policies and IP protections, crucial factors for many S&P 500 firms, especially those in technology and pharmaceuticals that drive a substantial part of the index's value.

Why Long Term?

The ramifications of eroding IP protections and trade relations will likely play out over years, affecting not just immediate market reactions but also long-term investment strategies and economic stability for S&P 500 firms.

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