Capital Markets: Observations & Insights

Tariffs Likely to Create Opportunity ​ Fundamentals

• Proposed tariffs are manageable

‒ While market sentiment is likely to be impacted, history suggests the long-term outcome will be better than the current bluster implies, due to negotiation and flexible supply chains that can often adjust with minimal impact

• Tariffs will create winners and losers that necessitates active management

‒ U.S. Chicken Tax of 1963, which taxed imported light trucks, hurt international auto manufactures and drove American companies’ dominant share in pickup trucks

China Trade Comparison to Global GDP

$79 Trillion

China - U.S. bilateral trade is only 0.8% of global economy

$506 Billion

$130 Billion

Global GDP U.S. Imports from China U.S. Exports to China

Source: IMF World Economic Outlook, U.S. Census Bureau, FactSet. Data is for 2017.

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