(Bloomberg) — Carlyle Group Inc. Chief Executive Officer Harvey Schwartz said he expects increased market volatility in the wake of President Donald Trump’s tariffs on the biggest US trading partners.
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“We should all buckle up a bit,” Schwartz said Tuesday at the Bloomberg Invest conference in New York.
The S&P 500 tumbled as much as 2% Tuesday, wiping out all of the benchmark’s gains since Trump’s Nov. 5 election victory, and other executives suggested that uncertainty around tariffs would characterize the investment landscape for the foreseeable future.
“We’ve not seen this level of tariffs, at least in modern times,” Lazard president Ray McGuire said at the event.
As traders grapple with questions about how Trump’s trade policy will affect prices across the economy, former US Treasury Secretary Robert Rubin warned that the tariffs will eventually have adverse effects on growth and productivity.
“If the new normal is a world of tariff walls, then we’ll all just be less productive, less efficient and less effective as economies,” Rubin said.
One important question is whether the Trump administration is implementing a one-time tariff — or escalating a full-fledged trade war, said Schwartz. A one-time tariff “is a one-time step up in price acceleration, but it’s not sustainably inflationary,” he said. “Trade wars are sustainably inflationary.”
Schwartz warned that markets are potentially too fixated on data points that might not be able to bring clarity on the direction of policies. At Carlyle, data from its portfolio companies indicates that purchasing managers ramped up orders of goods in recent months in anticipation of tariffs, he said.
“We just don’t know where the tariff discussions are going to go,” Schwartz said. “It’s too early.”
Others also advised patience. Blackstone President and Chief Operating Officer Jonathan Gray said investors should let “tariff diplomacy” play out. “Take two steps back, no one should panic,” said New York Stock Exchange President Lynn Martin.
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