Sameer Samana, Wells Fargo head of global equities and real assets, joins 'Money Movers' to discuss ongoing tariffs and the impact it has on the markets.

Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, stated that tariffs are likely to remain higher than at the start of the year and may persist longer than markets currently expect. He noted that the burden of these tariffs could be shared among U.S. producers, foreign producers, and U.S. consumers, with potential upward pressure on inflation and interest rates.

Samana suggested that the stock market may be underestimating the risks associated with prolonged tariffs, particularly regarding company margins and Federal Reserve rate cuts. He does not anticipate immediate rate cuts and believes a moderate market pullback is possible if tariffs remain in place longer than anticipated.

Tariffs likely to last longer than markets anticipate, says Samana

Let's bring in Samir Samana, Wells Fargo Investment Institute head of global equities and real assets. Samir, good to have you back. Thanks for the time. All this talk about tariffs, are you in sort of a waiting mode to see if and when this does hit or create some degradation in the macro? Not really. I mean, look, at the end of the day, at least for us, it's a direction of travel, right? And so if you look at the start of the year, we basically had de minimis tariffs. And wherever we land, we're going to have probably much higher tariffs. And so the only real question at this point is who's going to pay them. And I think the market, at least, is thinking that it'll be some form of U.S. producers, some form of foreign producers, and then U.S. consumers. And I think it's taking kind of the bullish view that the U.S. consumer will maybe kind of shoulder much of the burden, which will allow companies to kind of keep margins intact. We're not so sure about that. What do you think happens to margins? So we think there will probably be some shared burden. It's possible that the companies outside the U.S. maybe shouldered much of it. It's possible that the U.S. consumer, at least with U.S. companies, maybe takes the lion's share of it. But I guess we would argue that's going to put upward pressure on inflation, and it should put upward pressure on interest rates, and the Fed's probably not going to be cutting in that environment. So you think the market is underpricing that risk, the stock market? We do. We do. You know, you mentioned the valuations on the banks earlier. Banks tend to do well when there's a steeper curve. And obviously, you know, rate cuts do tend to lead to a steeper curve. So the banks are probably running ahead of what they see as Fed rate cuts kind of around the corner. We're not in that camp. We think even September is probably a toss-up, definitely no rate cuts in July. We don't anticipate a big sell-off in markets, but you know, it wouldn't surprise us if there's some type of 5 to 7 percent pullback, just based on the fact that some of these tariffs might stay in place a little bit longer than people anticipate.

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Washington

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Breakdown