Markets took a late-day gut punch on Oct. 14 after President Donald Trump took to Truth Social and threatened to terminate business with China “having to do with cooking oil” among other “elements of trade” in response to China slashing imports of U.S. soybeans in recent months. (1)
The social media post sent ripples across the stock market. Market watcher The Kobeissi Letter reported approximately $450 billion in market capitalization had been wiped from the S&P 500 in the minutes following the post. (2)
But this momentary blip — from which the stock market has already recovered — wasn’t so much a reflection of the cooking oil or soybean industries as it was an example of how swiftly investors can react to the words of influential figures. Especially one as powerful as Trump.
China and the U.S. are presently at loggerheads with regard to trade, especially with Trump recently threatening to impose an additional 100% tariff on Chinese goods, adding further tension to the situation.
So, when the president talks about trade policy with America’s biggest trading partner, even in passing, it has the ability to stir up the market. But that doesn’t necessarily equate to an escalation in real terms.
Brad Setser, former U.S. trade official now with the Council on Foreign Relations, wrote on X: “So from 100% tariffs on all Chinese trade (in response to the rare earth/critical mineral export controls) to targeted sanctions on cooking oil? (3)
“Definitely not escalatory.” (4)
Read more: Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
Knowing all of this, can your average investor do anything to protect their portfolio from the politics of trade?
If your portfolio leans on global trade, you could start by looking at your exposure. Are any holdings tied to sectors under threat of tariffs? Pay close attention to them. If you choose to hold, large companies may be able to absorb more pain and be in a better position for success afterward.
