Bill Campbell, DoubleLine Global Bond Portfolio Manager and author of the recent paper “Assessing Trump Trade Policy,” on March 13 shares with Perspectives host Chris Stegemann his framework for analyzing the “haphazard at best” rollout of Trump trade policies and the risks posed to financial markets and global growth. Mr. Campbell also discusses a sea change in European attitudes toward defense and infrastructure investing in the wake of serious doubts of U.S.’ NATO security guarantees. Buildouts in both areas could be accompanied by an end of European Union-mandated austerity budgets and rising sovereign debt levels relative to GDP.
Highlights include:
(1:24) April 2 should be a key date for clarification on the Trump administration’s intentions with respect to “the framework and objectives that the administration is hoping to achieve” through tariff and trade policy. On that date, U.S. Trade Representative Jamieson Greer is tasked to provide a detailed report on global trade.
(1:51) Mr. Campbell’s categorization of tariffs through the framework of the administration’s policy approaches: transactional (with a presumed lifespan to achieve specific goals within about a year) and structural (created with the intention of reordering trade relations in a more permanent fashion or at least through the lifespan of the administration). He further differentiates transactional tariffs in terms of administration objectives for national security and other goals where the White House hopes trade pressure can provide negotiating leverage.
(4:59) The Trump administration’s ideas of using tariffs as “a long-term revenue item for the U.S. budget,” as exhibited in President Donald Trump’s executive order creating an external revenue service, and as a goad to incentivize non-U.S. exporters to locate production inside U.S. borders. Mr. Campbell notes a “dramatic overnight change in parliaments across the European continent” with the realization that Cold War and post-Cold War security guarantees by the U.S. might be a thing of the past.
(7:36) Layering risk: The already developing outcomes of U.S. tariffs provoking retaliatory tariffs from trading partners, which in turn elicit another round of tariffs by the U.S. This occurred on March 13 with the administration’s threat of 200% tariffs on alcoholic beverage imports into the U.S. from Europe after the European Union issued tariffs on $28 billion of U.S. goods in relation to earlier tariffs on steel and aluminum announced by the administration.
(11:02) Possible investment opportunities outside the U.S., for example, in Europe in the wake of the administration’s restructuring of global trade and approach to NATO. The prospective “buildout of defense in Europe,” Mr. Campbell says, will entail “a buildout of infrastructure. And the only way to do that is to jettison the fiscal rules that Europeans had been abiding by, or trying to, for the past several decades.” Debt-to-GDP constraints “are now going to be much more forgiving, especially for investment in defense and infrastructure.”
Mr. Campbell joined DoubleLine in 2013. He is a Portfolio Manager for the DoubleLine Global Bond Strategy and is a permanent member of the Fixed Income Asset Allocation Committee. He covers Developed Markets, Central & Eastern Europe, Middle East and Africa (CEEMEA), and China. Prior to DoubleLine, Mr. Campbell worked for Peridiem Global Investors as a Global Fixed Income Research Analyst and Portfolio Manager. Previous to that, he was with Nuveen Investment Management Company, first as a Quantitative Analyst in their Risk Management and Portfolio Construction Group, then as a Vice President in their Taxable Fixed Income Group. Mr. Campbell also worked at John Hancock Financial as an Investment Analyst. He holds a BS in Business Economics and International Business, as well as a BA in English, from Pennsylvania State University. Mr. Campbell holds an MA in Mathematics, with a focus on Mathematical Finance, from Boston University.
