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Navigating Tariffs

WHAT WE THINK:

Tariff outlook: Scope, scale, and longevity of U.S. tariffs hinge on reducing the trade deficit, rebalancing global trade, and other factors. Investors may see base tariff rates remain higher, alongside more aggressive tariffs on select goods or countries, even amidst new trade deals.
U.S. economic effects: Risk of recession has increased as consumers, businesses and markets navigate the uncertainty. Inflation risks have returned as tariffs may increase prices.
The Fed’s challenge: The Fed will likely react more slowly to economic weakness but may focus on reducing rates if labor markets weaken.

WHAT IT MEANS FOR INVESTORS:

Longer-term rewards: Despite short-term volatility, current yields have consistently rewarded long-term investors as income accumulates over time – see chart at the right.
High quality focus: Favor higher quality fixed income markets, which still offer attractive starting yields.
Seek stability and diversification: Having the flexibility to take advantage of global opportunities across asset classes may be rewarded as economies and markets diverge.

Download Client Handout Advisor Playbook

The Power of Starting Yields and High Quality Bonds

Starting yields on bonds are a key indicator of potential future returns. Rachael Razzano, account manager, charts the importance of considering fixed income investments when yields are attractive, despite potential volatility, and the long-term benefits of staying invested in high quality bonds.

Economic and Market Commentary

The Fed Is in a ‘Good Place’ – But for How Long?

5/7/2025

Fed officials remain patient, likely awaiting hard evidence of a weaker U.S. labor market before considering rate cuts.

Tiffany Wilding, Allison Boxer

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PIMCO Perspectives

Trade Wars and the U.S. Dollar

4/17/2025

Rapid U.S. policy changes pose challenges for investors accustomed to a global financial system anchored in U.S. markets and assets.

Marc Seidner, Pramol Dhawan

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Economic and Market Commentary

How Effectively Can the U.S. Economy Untether From China?

4/17/2025

The outlook for U.S. growth and inflation hinges on the ability of U.S. supply chains to pivot out of China fairly quickly, a process that won’t be seamless.

Tiffany Wilding

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Accrued Interest Podcast

Tariff Update: Navigating Global Market Turbulence

Group CIO Dan Ivascyn and Esteban Burbano, fixed income strategist, discuss the impact of U.S. tariffs on global markets, how we’re navigating the turbulence, and why flexibility and a higher quality tilt are essential in this evolving environment.

Watch Replay Listen to Podcast

Tariff Update: Navigating Global Market Turbulence

Tracking Tariffs with Libby Cantrill & Tiffany Wilding

With recent tariff announcements and the resulting market movements, maintaining a clear mindset can be incredibly difficult – yet it is crucial now more than ever. Join host Greg Hall with Libby Cantrill, head of U.S. Public Policy, and economist, Tiffany Wilding as they share insights on tariffs, future Fed policy and more.

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More to Know

Economic and Market Commentary

Challenges to Fed Independence

4/24/2025

Although President Trump has said he has no intention of firing Fed Chair Powell, the Trump administration may be testing the laws underpinning Fed independence.

Libby Cantrill, Tiffany Wilding

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Economic and Market Commentary

The U.S. Economy’s Trajectory Amid Higher Tariffs

4/9/2025

Tariff policies have the potential to drive stagflation in the U.S. and contraction in other countries, and to complicate the Federal Reserve’s monetary decisions.

Tiffany Wilding

Read Article

Cyclical Outlook

Seeking Stability

4/1/2025

At a time of sweeping geopolitical change and clear challenges for riskier assets, bond markets offer a source of stability.

Tiffany Wilding, Andrew Balls

Read Article

How Can PIMCO Help You?

For helpful resources, account assistance, and general contact, visit our Contact & Support Center. For more, access the additional links below.

Contact & Support

Disclosures

All investments contain risk and may lose value. Investors should consult their investment professional prior to making an investment decision. Past performance is not a guarantee of future results.

Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed.

Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. Different types of investments involve varying degrees of risk. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those shown.

Bloomberg U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America LLC in the United States and throughout the world. ©2025, PIMCO

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