Tariff Volatility: How Investors Can Navigate the Uncertainty of the Trade War

Donald Trump reignited the trade war last week with a flurry of fresh tariff updates, and investors are eyeing another stretch of volatility in markets as a result.

With the July 9 deadline extended to August 1, the road ahead is uncertain. Will Trump pivot and once again validate the TACO trade, or will markets end up with a much higher tariff rate than expected?

Trump has announced plans for 30% tariffs on goods imported from both the European Union (EU) and Mexico, expected to take effect on August 1. He’s also said Canada would be subject to 35% tariffs, and Japan and South Korea tariffs would be set at 25%.

“It is possible that the White House will only back away from its latest threats if the market falls,” Ulrike Hoffmann-Burchardi, CIO of Americas and Global Head of Equities at UBS, said in a note on Monday. “We have been advising investors to take steps to bolster the resilience of their portfolios against this uncertain backdrop.”

UBS had a few tips for investors to steer through the uncertainty that’s likely still ahead.

First, the bank recommends investors “phase into equities.“
While UBS predicts that clarity on economic policy and monetary easing from the federal reserve could push markets higher in 2026, it predicts that growth will be limited this year. Therefore, rather than rushing into the stock market, investors should think about “building exposure gradually and taking advantage of pockets of volatility.”

The note highlighted growth potential in US sectors such as technology, healthcare, and financial services, as well as select Asian markets, including Taiwan, India and mainland China.

Second, investors should focus on mitigating policy risks. One time-tested way to hedge the wider uncertain is to allocate some money to gold.

“We believe a midsingle-digit percentage allocation to gold in a USD portfolio can diversify and hedge against political risk and inflation,” the note said.

Finally, investors should focus on the long-term opportunities.

For investors seeking long-term investment opportunities, UBS reiterated the growth potential it sees in artificial intelligence, power and resources, and human longevity. It maintains that these areas are backed by ongoing trends and are well-positioned to withstand any short-term swings.

In the note, the analysts highlighted the “global profit pools” that they believe have resulted from AI, energy infrastructure, and healthcare, reshaping entire industries in ways that set these sectors up for long-term growth.