Investors are underestimating trade war risks under a Donald Trump presidency, according to strategists at Bank of America Corp. who predict a 5% slide in emerging-market currencies over the first half of 2025, and a selloff in sovereign debt.
BofA strategists led by David Hauner expect China’s yuan to bear the brunt, seeing the Chinese currency sliding to 7.6 per dollar in the first half of next year, should the incoming US administration impose 40% tariffs on Chinese goods. A heftier 60% levy would imply the yuan at 8 per dollar, versus current levels around 7.24, they add.