BlackRock, the world’s largest asset manager, has emphasized the need for selective investment strategies in response to escalating trade disruptions, particularly between the U.S. and China, as outlined in their May 2025 market commentaries. The firm highlights that U.S. tariffs, which spiked following the April 2, 2025, announcement, have triggered supply-driven economic contractions reminiscent of COVID-19-era bottlenecks. These disruptions, coupled with retaliatory actions and policy uncertainty, are expected to drive market volatility, with BlackRock projecting a U.S. economic contraction in 2025 due to production shutdowns and supply chain issues.
BlackRock advises investors to adopt a selective approach, focusing on security selection and data-driven insights to navigate the uneven impact of tariffs across companies and sectors. For instance, firms with heavy global supply chain exposure, particularly those reliant on Chinese semiconductors or auto parts, face higher risks, while sectors like U.S. banks and healthcare offer resilience due to strong fundamentals. The firm remains overweight on U.S. equities, driven by the artificial intelligence (AI) theme, but stresses that tariffs create higher return dispersion, making active portfolio management critical.
In their Q2 2025 Investment Outlook, BlackRock notes that global supply chains cannot be quickly rewired without significant disruption, reinforcing the need for tactical adaptability. They also point to opportunities in regions like India, which could benefit from global trade realignments, as noted by BlackRock Investment’s Vivek Paul. However, the firm cautions that near-term volatility is likely, with potential legal challenges and selective tariff rollbacks adding complexity. Despite this, BlackRock sees a path for U.S. equities to regain leadership over a six- to 12-month horizon, provided investors prioritize quality and outcome-neutral trades.
This perspective aligns with BlackRock’s broader view that while trade conflicts pose challenges, economic rules and negotiations—such as the recent U.S.-China 90-day tariff reduction deal announced on May 12, 2025—could limit long-term damage, supporting their pro-risk stance on developed market stocks.
