Written For The Australian - Tackle a global tariff war with these Exchange Traded Funds
by James GerrardFri Apr 4 2025
"Liberation Day" — that's what Donald Trump called it. For global investors, it felt more like a hand grenade lobbed into portfolios.
With tariffs ranging from 10 per cent (hello, Australia) all the way up to 49 per cent on Cambodian imports, the global trade order has been shaken. And since most Australian investors get their global exposure through ETFs, now is the time to look under the hood.
Here's how I see the landscape.
The likely winners? Government bonds. Futures markets are pricing in three RBA and three Fed rate cuts by the end of 2025, and if a growth scare forces central banks to act, longer-dated bond ETFs like the Betashares Australian Government Bond ETF or Vanguard's equivalent should benefit — locked-in yields become more valuable as new bonds offer less.
Gold is doing what gold does in uncertain times — pushing to record highs. The Global X Gold ETF is the best-known option on the ASX.
Structural tailwinds also favour defence (VanEck Global Defence ETF), cyber security (Betashares Global Cybersecurity ETF), and — perhaps counterintuitively — Chinese tech stocks, which are back in favour domestically. US small caps and infrastructure plays could benefit if Trump pivots to internal stimulus.
The losers? Large US multinationals with global supply chains. Apple makes most of its products in China, now facing a 34 per cent tariff — someone has to eat that cost. Australian miners are exposed too, since trade wars typically crush commodity demand. Emerging markets, Japan, and export-heavy European economies are also in the firing line.
My take: don't panic-sell, but don't sit still either. Review your ETF holdings, understand where the underlying revenue actually comes from, and be ready to reposition. Trump's bark may prove worse than his bite — but hope isn't an investment strategy.