Maya Bhandari

And at Neuberger Berman, we wouldn't rule out a high starting point, perhaps even as high as 20% for major trading partners. But we would also emphasize two other points here. First, and importantly, this is likely to be a negotiation, a point Treasury Secretary Besant made quite clearly, including yesterday, reflecting on today's announcement as, quote, unquote, a cap.

And at Neuberger Berman, we wouldn't rule out a high starting point, perhaps even as high as 20% for major trading partners. But we would also emphasize two other points here. First, and importantly, this is likely to be a negotiation, a point Treasury Secretary Besant made quite clearly, including yesterday, reflecting on today's announcement as, quote, unquote, a cap.

So a final number is likely to be lower. And second, kind of in keeping with this conclusion, tariffs to date sort of take the U.S. effective rate from about two and a half percent to about seven percent. So the numbers we're speaking of here are a meaningful increase that would take us back to, you know, the sort of tariff regime we lost in the 1940s.

So a final number is likely to be lower. And second, kind of in keeping with this conclusion, tariffs to date sort of take the U.S. effective rate from about two and a half percent to about seven percent. So the numbers we're speaking of here are a meaningful increase that would take us back to, you know, the sort of tariff regime we lost in the 1940s.

And so on balance, our judgment is that these are unlikely in full force.

And so on balance, our judgment is that these are unlikely in full force.

Absolutely. And so we're talking about some of the U.S. 's largest trading partners, countries like Mexico, Canada, Europe, China, of course. But when we put these countries together, these 15 countries, they together account, Luke, for about 90 percent of U.S. imports. So we are covering, if you will, the lion's share of U.S. trade partners.

Absolutely. And so we're talking about some of the U.S. 's largest trading partners, countries like Mexico, Canada, Europe, China, of course. But when we put these countries together, these 15 countries, they together account, Luke, for about 90 percent of U.S. imports. So we are covering, if you will, the lion's share of U.S. trade partners.

Now, there's been a little bit of to-ing and fro-ing on that overnight. So I think for our listeners, perhaps the most important takeaway here is that what is being discussed could be very disruptive indeed to a highly integrated global economy. But this is going to be a negotiation and uncertainty is here to stay because what we didn't come to is how other countries respond.

Now, there's been a little bit of to-ing and fro-ing on that overnight. So I think for our listeners, perhaps the most important takeaway here is that what is being discussed could be very disruptive indeed to a highly integrated global economy. But this is going to be a negotiation and uncertainty is here to stay because what we didn't come to is how other countries respond.

And I think that is perhaps one of the bigger risks out there. So, for example, sitting where I'm sitting in Europe, there have been discussions of deployment of the anti-coercion instruments, or the ACIs in jargon, in order to respond to the tariffs that may be announced today.

And I think that is perhaps one of the bigger risks out there. So, for example, sitting where I'm sitting in Europe, there have been discussions of deployment of the anti-coercion instruments, or the ACIs in jargon, in order to respond to the tariffs that may be announced today.

Yeah, I mean, these are a serious toolkit. It absolutely takes the trade war, if you will, to services in addition to goods. But in practical terms, the ACI can be used to restrict the activities of banks. It can be used to revoke patents. It can be used to prevent companies receiving revenues from software updates or streaming. So it is significant.

Yeah, I mean, these are a serious toolkit. It absolutely takes the trade war, if you will, to services in addition to goods. But in practical terms, the ACI can be used to restrict the activities of banks. It can be used to revoke patents. It can be used to prevent companies receiving revenues from software updates or streaming. So it is significant.

And in addition, so far, we've also heard from the U.S. administration that any such counter response will be met with another response. So you can see how this could get quite messy.

And in addition, so far, we've also heard from the U.S. administration that any such counter response will be met with another response. So you can see how this could get quite messy.

Absolutely. I mean, you know, I like to say that every risk has attached to it a price. For example, the U.S. tech stocks that have been hit harder by this uncertainty, you know, they're down, what, 14, 15 percent this year, about three times the broader index.

Absolutely. I mean, you know, I like to say that every risk has attached to it a price. For example, the U.S. tech stocks that have been hit harder by this uncertainty, you know, they're down, what, 14, 15 percent this year, about three times the broader index.

Now, I should say that, you know, at Neuberger Berman, we have been neutral equity markets overall, but actually have been favoring the non-MAG7 stocks, so the other 493 stocks in the S&P 500. And And that's played out relatively well so far.

Now, I should say that, you know, at Neuberger Berman, we have been neutral equity markets overall, but actually have been favoring the non-MAG7 stocks, so the other 493 stocks in the S&P 500. And And that's played out relatively well so far.

I'd say more recently, you know, while small cap is clearly an area that's baked in some bad news, you do need typically a trigger for these companies to start outperforming. And we can't quite see what that trigger will be. More recently, we have actually been expecting a broadening out away from the U.S. to the rest of the world, in particular areas like Europe and Japan.

I'd say more recently, you know, while small cap is clearly an area that's baked in some bad news, you do need typically a trigger for these companies to start outperforming. And we can't quite see what that trigger will be. More recently, we have actually been expecting a broadening out away from the U.S. to the rest of the world, in particular areas like Europe and Japan.

One of the consequences of recent geopolitical developments, of course, has been a really significant shift in European fiscal policy. And that's something that we're quite keen to capture in our asset allocation as well.

One of the consequences of recent geopolitical developments, of course, has been a really significant shift in European fiscal policy. And that's something that we're quite keen to capture in our asset allocation as well.

My pleasure.

My pleasure.

it does seem likely that what we learn today is going to include some non-tariff measures, capturing things like currency undervaluation as a possible gauge, which is about 15-odd percent when you weigh it by U.S. trade partners. VAT, an area of particular focus here in Europe, but also around 15 percent. And as you see with these numbers, Luke, the range is wide, uncertain.

it does seem likely that what we learn today is going to include some non-tariff measures, capturing things like currency undervaluation as a possible gauge, which is about 15-odd percent when you weigh it by U.S. trade partners. VAT, an area of particular focus here in Europe, but also around 15 percent. And as you see with these numbers, Luke, the range is wide, uncertain.