Morgan Stanley warns: US tariff policy may continue, value of defensive sectors in US stocks highlighted.

Morgan Stanley indicates that after the new US President takes office in 2025, import tariffs may still be part of the US economic landscape, and three industries may help alleviate related pressures for investors. In a report, Morgan Stanley stated that overall, the tariff system implemented by former US President Donald Trump has continued under the leadership of Joe Biden. Monica Gonzalez, head of US policy at Morgan Stanley Wealth Management, stated that Vice President Kamala Harris had expressed opposition to imposing additional tariffs during her presidential campaign, but has not expressed a willingness to change the current tariff structure. Gonzalez indicated that this suggests that trade and tariff policies under Harris's leadership may remain largely consistent with the Biden administration. Trump had previously stated that if he returned to the White House, he would like to further impose tariffs. Gonzalez stated in the report on Wednesday: If tariffs increase and/or GDP faces negative pressure, we encourage investors to consider defensive stocks such as essential consumer goods, healthcare, utilities, and selected retailers less affected by overseas production costs. She did not specify the names of the stocks. The defensive sector of the S&P 500 index achieved double-digit growth in 2024. According to Morgan Stanleys assessment, Trump planned to impose a 60% tariff on Chinese products, as well as a universal 10% tariff, which would increase the inflation rate by 2.5% and reduce the US GDP by 0.5% in the first two years after implementation. Morgan Stanley cited a report from the independent tax policy non-profit organization Tax Foundation, stating that since 2018, Trump and Biden's tariffs have led to an average annual increase of $200 to $300 in costs for American households. In terms of market performance, in 2018 and 2019, CECEP Solar Energy and steel stocks were affected by US tariffs on CECEP Solar Energy and steel imports. In the six months following the imposition of tariffs, the Invesco CECEP Solar Energy ETF (TAN.US) and VanEck Steel ETF (SLX.US) both dropped by over 11%. Morgan Stanley stated that the Biden administration has expanded tariff rates for CECEP Solar Energy batteries, electric vehicles, and other industries. Tariffs often impact industry market performance. So far this year, the performance of related sectors is as follows: The S&P 500 Utilities sector has risen by 23%, with the Utilities Select Sector Index ETF (XLU.US) rising by 23.2%; The Consumer Staples sector has risen by 16.4%, with the Consumer Staples Select Sector Index ETF (XLP.US) rising by 14.9%; The Healthcare sector has risen by 13.6%, with the Healthcare Select Sector Index ETF (XLV.US) rising by 14.3%; The S&P 500 index has risen by 19.8%, while the Invesco CECEP Solar Energy ETF has fallen by 21.9% and the VanEck Steel ETF has fallen by 7.9%.