Just when investors thought stock markets across the world had brushed past trade war concerns, the Trump administration introduced a new US$200 billion list of additional tariffs in Chinese goods, spurring a global selloff.

European stocks tumbled as much as 1.3 per cent led by miners and automakers. U.S. stock-index futures dropped more than 1 per cent. Almost all emerging-market currencies slumped and MSCI Emerging Markets Index of stocks sank 0.9 per cent.

“The trade escalation or dispute is certainly not going away,” Nandini Ramakrishnan, global market strategist at JPMorgan Asset Management, said on Bloomberg TV. “I wouldn’t say this is a buying opportunity for the specific sectors, I think if you’ve got that longer-term view and you’re able to find pockets of the market that have been unfairly penalized by the trade discussions, then that’s a good way to do it.”

Here’s what strategists said about the new tariff list and its effect on markets:

Destabilizing Impact

Sylvain Goyon, head of strategy at Oddo & Cie:

Proposed new tariffs highlight the “destabilizing impact” of the U.S. administration’s international trade policy “The first trade spats were not material in terms of GDP impact, hence not that negative on EPS growth. But this escalation will lead the market to re-assess negatively its growth scenario.” This could fuel risk aversion leading to lower UST yields, outperformance of bond proxies and dividend-paying sectors

Complacency

Max Kettner, a cross-asset strategist at Commerzbank:

“Yes, the market has been warned about additional tariffs already. But, what we see is that the market is highly volatile in its response to the trade conflict right now. So only because we haven’t really heard a lot about the trade tensions and there were not that many tweets about it in the past couple of days this already was enough to support risk assets” However, Commerzbank’s sentiment indexes signal that investors’ views on stocks is getting “quite bullish” again; this indicates investors are still “slightly complacent” about trade but also about potentially lower global growth in 2H Is currently underweight equities and continues to expect a “fairly difficult” summer for risk assets; overweight developed market rates, U.S. Treasuries and European govt bonds

Hot Potato

Nandini Ramakrishnan, global market strategist at JPMorgan Asset Management:

Europe seems to be caught in the middle of the China-U.S. discussions; “Who might end up holding the hot potato of all of this is Europe where it is a very export-oriented economy in some parts of the industries, particularly those industrial companies, manufacturers, autos” Examples of stocks that have been oversold: Chinese stocks that are more focused on the consumer; some European sectors that cater to non-export parts of the economy Within equity markets, U.S. stocks “certainly” stand out; but benefits from tax reform may not last

Not The Same

Paul Donovan, global chief economist at UBS:

“Publishing a list is not the same thing as raising taxes” In reality, taxes couldn’t be levied before September, potentially not earlier than November; lower U.S. tax rate at 10% will reduce the impact

Dark Day

Yang Liu, chief investment officer at Atlantis Investment Management Ltd.:

“It’s obviously a dark day” Investors should hold 30 to 40% cash, buy 10 to 20% bonds; then you’d allocate to healthcare, H shares and some IPOs, which are being rushed into Hong Kong

Reasons to Ignore

Kristina Hooper, chief global market strategist at Invesco Ltd.:

“What we have seen repeatedly this year is that investors are looking for reasons to ignore trade concerns, so I expect attention to turn back to earnings relatively quickly” Even so, investors can’t ignore the protectionism threat on the global economy. “This problem is not going away but is instead metastasizing”

China Retaliation

Suan Teck Kin, head of research at United Overseas Bank Ltd.:

China may impose higher tariffs on U.S. products so it can match the proposed 10 percent tariffs “Whichever way, the markets will take it negatively after the calm over the past few days”

Glass Half Full

Paul Nolte, a portfolio manager at Kingsview Asset Management in Chicago:

“The markets will be in a twist for a day or two and then begin looking at the glass as half full rather than half empty” The longer term impact of tariffs combined with a Fed hike could “provide the fuel to push the U.S. economy into a recession later in 2019”

Not a Surprise

Michael O’Rourke, chief market strategist at JonesTrading:

This “will serve as a reality check for the market, reminding investors to reconsider how aggressive they want to be” “The $200 billion in potential additional tariffs is not a surprise,” since Trump warned that this could happen, he said. Equity markets will recognize this as “a much bigger problem” if the tariffs are instituted

Earnings Adjustments

Tim Ghriskey, chief investment strategist at Inverness Counsel:

Companies will begin to discuss in their earnings reports how the tariffs will impact their earnings going forward “We could see earnings estimates lowered because of the potential for additional tariffs. The U.S. Markets won’t react positively to that”