By François RIMEU, Senior strategist, Crédit Mutuel Asset Management

Crédit Mutuel Asset Management is an asset management company within Groupe La Française, the holding company for the asset management division of Crédit Mutuel Alliance Fédérale.

Tariffs could once again become a key market theme over the coming months. Although the issue has faded from investors’ radar since the sharp market disruption caused by Donald Trump’s tariff announcements in 2025, several developments suggest it may soon return to the forefront. The Republican administration has so far faced a number of legal setbacks over its trade policy, while President Trump has largely shifted his attention to other priorities. Yet the underlying rationale for higher tariffs has not disappeared.

US public finances continue to deteriorate despite tariffs being presented as a way to improve the country’s fiscal position. The US trade deficit widened to $77 billion in May, one of its largest shortfalls outside the Covid period, while the current account deficit reached $226 billion in the first quarter, significantly worse than the $208 billion expected (Source: Bloomberg, March 2026). Looking ahead, the outlook is unlikely to improve materially as US technology companies continue to import large volumes of advanced semiconductors from Taiwan and South Korea.

Several important policy milestones over the summer could also bring trade issues back into focus. The United States has decided not to renew the current United States–Mexico–Canada Agreement (USMCA), opting instead for annual negotiations. The Next round of talks is scheduled for 20 July in Mexico City.

Another important deadline falls at the end of July. The temporary 10% tariffs introduced by Donald Trump after the Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful are due to expire. They are expected to be replaced by new measures, most likely under Section 301 of the Trade Act of 1974.

Relations with Europe could also prove challenging. Although the EU and the US agreed in June to cap tariffs at 15%, the agreement appears fragile. Since then, Donald Trump has repeatedly threatened the European automotive sector, while digital taxation, particularly with France, remains a potential source of friction.

Attention at the end of the summer may then shift back to China. The current trade truce expires in November, with negotiations expected to resume after the summer.

Taken together, these developments suggest that tariffs could once again become a central feature of the Republican administration’s agenda. With the US midterm elections approaching, trade policy remains an issue that resonates with President Trump’s political base. Greenland has also re-emerged as a geopolitical talking point, highlighting the administration’s renewed focus on strategic issues.

Whether these developments will materially affect financial markets remains uncertain. Much will depend on the outcome of the upcoming negotiations. However, renewed trade tensions would almost certainly add to market uncertainty and could trigger further volatility at a time when global supply chains remain under pressure.

Asset Allocation

P> While the risk of renewed trade tension is rising, we continue to favor equities and the short end of the yield curve. This positioning is underpinned by lower oil prices, an earnings season that is likely to deliver solid results and Investor positioning that remains broadly neutral.

By contrast, we are more cautious on the long end of the yield curve. Long-duration bonds were among the hardest-hit asset classes during the previous escalation in trade tensions earlier this year, and any renewed uncertainty around US trade policy could once again put upward pressure on long-term yields.