The Impact of Trump's Trade Deals on Global Equity Markets: Strategic Positioning in a Post-Truce World

In July 2025, the global equity markets are navigating a pivotal inflection point. After months of escalating tariffs and retaliatory measures under President Donald Trump's aggressive trade policies, a fragile truce between the U.S., China, and the EU has injected stability into cross-border commerce. This shift is reshaping investor sentiment, with sectors tied to supply chain normalization and geopolitical de-escalation emerging as prime beneficiaries. For strategic investors, the challenge lies in identifying undervalued opportunities while balancing the risks of a still-volatile trade environment.

Trade Truces and Market Stabilization

The U.S.-China trade truce, announced in July 2025, marked a critical turning point. Tariffs on Chinese goods dropped from 145% to 30%, while China reduced its retaliatory tariffs on U.S. exports from 125% to 10%. This de-escalation, though temporary (set to expire in August), has already stabilized global markets. The S&P 500 surged to record highs as investors recalibrated expectations, with the index's volatility index (VIX) declining to pre-April levels. Similarly, the U.S.-EU trade agreement—anchored on a 15% baseline tariff and $600 billion in EU investments—has further solidified confidence.

Sector Analysis: Winners in a Post-Truce Era

1. Semiconductors and Advanced Manufacturing
The semiconductor sector is a standout beneficiary. Companies like STMicroelectronics (STMPA), a European leader in energy-efficient chips, are trading at a 48% discount to intrinsic value. With global demand for AI-driven and green technologies surging, STMicro's partnerships in advanced optics and human presence detection position it to capitalize on long-term trends.

2. Industrial Materials and Electric Vehicles
Puyang Refractories (002225), a Chinese manufacturer of refractory materials critical to EV and construction supply chains, is trading at CN¥6.34—49.7% below its intrinsic value. Its 45.5% projected earnings growth underscores the resilience of China's domestic industrial demand amid trade uncertainty. However, investors must monitor its debt-servicing capacity.

3. Energy Transition and Smart Grids
Chung-Hsin Electric (1513), a Taiwanese leader in electrical machinery, is trading at NT$166.5—21.5% undervalued. Its expansion into smart grid technology aligns with regulatory tailwinds in Asia and Europe, where governments are prioritizing energy resilience.

4. Space and Defense Technologies
Rocket Lab (RKLB), a U.S. space launch company, is trading at US$46.88—33% below fair value. Surging demand for satellite launches in defense and climate monitoring, coupled with partnerships with European space agencies, positions Rocket Lab to benefit from the renewed focus on cross-border collaboration.

5. Enterprise Software and Cloud Services
Oracle (ORCL), trading at US$238.11—10.4% undervalued—stands to gain from AI-driven cloud adoption. Its recent collaboration with Chinese tech firms, despite geopolitical risks, highlights a pragmatic approach to market access.

Investment Strategy: Balancing Opportunity and Risk

While the truce offers a window of optimism, investors must remain vigilant. The U.S.-China agreement's fragility—tariffs on Chinese goods remain at 30%—means a relapse into conflict could reignite volatility. For defensive positioning, prioritize companies with diversified supply chains and low exposure to tariff-sensitive sectors.

Geographic Diversification
- Europe: STMicroelectronics and Chung-Hsin Electric offer exposure to resilient industrial and tech markets.
- Asia: Puyang Refractories benefits from China's domestic industrial demand, while DoorDash (DASH)—trading at US$239.82 (30.9% undervalued)—capitalizes on delivery and advertising networks insulated from trade tensions.
- U.S.: Oracle and Rocket Lab exemplify cross-border growth in sectors less impacted by tariffs.

Sectoral Resilience
Focus on industries where demand is inelastic to geopolitical shifts, such as energy transition (smart grids, EV materials) and defense (space, semiconductors). These sectors are less vulnerable to trade disruptions and align with long-term macro trends.

Conclusion: Navigating the New Normal

The 2025 trade truce is a fragile but significant step toward stabilizing global commerce. For investors, the key to success lies in strategic positioning: balancing undervalued equities with defensive sectors and geographic diversification. While the U.S.-EU agreement offers a template for de-escalation, the U.S.-China relationship remains a wildcard. By focusing on companies with strong fundamentals and alignment with structural growth drivers—be it AI, green energy, or space—investors can capitalize on the current window of opportunity.

As the August 2025 deadline looms, the coming months will test the durability of this truce. But for now, the interplay of trade policy and market dynamics offers a unique landscape for those willing to act with both caution and conviction.