Investors significantly modify their portfolios in response to the volatile trade tariff environment, with approximately 80% making changes.
Headline: Institutional Investors Adopt Cautious Stance on U.S. Trade Policies in 2025
In a recent survey conducted among 132 institutional investors and 22 institutional consultants, it was revealed that more than eight in ten European investors anticipate making shifts in their portfolios due to President Trump's trade policies[1]. This shift is reflected in a higher proportion of European investors (86%) compared to the global average (77%) who are making tactical or strategic changes to their portfolios[2].
The survey, carried out in Q2 2025, included institutions managing or overseeing more than $4.9 trillion in assets[1]. The findings suggest a largely cautious and negative outlook on the long-term impact of U.S. trade policies on global markets. Many investors are pulling back from U.S. equities and making strategic portfolio shifts due to uncertainty and evolving tariff policies, which have contributed to market volatility this year[1][2].
Institutional investors acknowledge that while early tariffs had limited immediate economic impact, they are more concerned about lasting negative effects on global trade and portfolio construction[2]. In response, many are increasing allocations to value stocks, defensive sectors, or cash to mitigate risk, reflecting a “nimbler reaction” compared to previous cycles[2].
From an economic perspective, tariff rates are expected to eventually settle between 15-18%, despite some legal challenges possibly lowering certain tariffs temporarily[3]. Tariffs remain a central part of the U.S. administration’s economic agenda, though the approach appears more pragmatic with delays, rollbacks, and trade deals mitigating some market fears[3][4].
However, protectionist U.S. trade policy continues to raise the cost of global trade and is viewed as a downside risk to global economic and credit outlooks[5].
Concern about a no deal scenario is highest among Europeans, with 40% expecting significant upheaval[6]. Almost two-thirds (64%) of global investors expect Trump’s trade policies to fuel structurally higher inflation and slower economic growth[7].
In addition, 69% of respondents think President Trump's policies will accelerate a global shift away from U.S. Treasuries and the dollar[8]. This is echoed by 65% of European respondents who are bearish on U.S. equity markets over the next three months[9].
Institutions are looking at ways to de-risk and build greater portfolio resilience due to a wide range of economic scenarios now in play[10]. Michael Morley, head of CoreData U.S., stated that the research suggests any optimism institutional investors have about the world's most important trade negotiations belies a sense that global trade has irrevocably changed, and thus, portfolio construction must adapt to a new reality[11].
It's worth noting that the survey did not provide new facts about various aspects such as the proportion of investors making tactical or strategic changes to their portfolios, the proportion of European investors making such changes, the proportion of investors bearish on U.S. equity markets, the proportion of investors reducing exposure to U.S. assets, the proportion of investors trimming exposure to trade-sensitive assets, the proportion of investors rotating from growth to value stocks and/or defensive sectors, the proportion of investors increasing cash allocations, the proportion of investors hedging exposure to the U.S. dollar, or the proportion of respondents thinking President Trump's policies will accelerate a global shift away from U.S. Treasuries and the dollar[6][8].
Despite these uncertainties, 66% of global respondents are optimistic about a US-China trade agreement within the next year[12]. APAC investors (73%) are more optimistic than their peers in the U.S. (69%) and Europe (58%) about a US-China trade agreement[13]. However, 32% of global investors think the U.S. and China will fail to agree on a trade deal[14].
The survey included public and private pensions, insurers, foundations, endowments, family offices, and institutional investment consultants[15].
In conclusion, the current outlook of institutional investors on U.S. trade policies in 2025 is largely cautious and negative, leading to strategic repositioning away from U.S. equities and heightened focus on risk mitigation amid expected continued uncertainty and elevated tariff levels, which are seen as weighing negatively on global markets overall[1][2][3][5].
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The cautious stance adopted by institutional investors on U.S. trade policies in 2025 is influencing their investing strategies in the business world, as more than eight out of ten European investors are making shifts in their portfolios due to President Trump's trade policies [1]. This cautious outlook extends to politics, with many investors viewing the long-term impact of U.S. trade policies on global markets as negative [2]. Furthermore, the uncertainty and evolving tariff policies are causing investors to scrutinize general-news reports closely, as the tariffs have contributed to market volatility throughout the year [1][2].
