Jefferies' Chris Wood Warns of US Stock Market Peak Amid Tariff Impact; LA Port Chief Predicts 35% Drop in China Trade

Christopher Wood, Jefferies' global head of equity strategy, warns that the U.S. stock market may have peaked due to the Trump administration's tariffs, which he claims have damaged America's global economic standing. Gene Seroka, Executive Director of the Port of Los Angeles, predicts a 35% drop in cargo volume from China, highlighting the tariffs' economic impact. The tariffs have led to increased costs for companies like Microsoft and Harley-Davidson, and potential job losses in the U.S. transportation and retail sectors. Despite some signs of renewed trade talks, market uncertainty persists.

Jefferies' Chris Wood: "The Best Is Over for U.S. Stocks"

Christopher Wood, a veteran market strategist at Jefferies, believes the U.S. stock market has already passed its zenith. Speaking to Bloomberg, Wood stated that U.S. equities likely peaked on Christmas Eve of the previous year, when measured against the MSCI All Countries World Index. He attributes this turning point to the Trump administration’s tariff policies, which he says have inflicted lasting damage on the U.S.'s global economic standing.

“I have been stating since the start of the year that my base case, until proven wrong, is that U.S. equities reached an all-time peak on Christmas Eve last year,” Wood said. He emphasized that the damage is already visible in financial markets, pointing to an 8% year-to-date decline in the U.S. Dollar Index since the announcement of new tariffs on April 2.

Wood argues that the U.S. market’s dominance—accounting for 67% of the global market last year—is unsustainable, especially given stretched valuations. The S&P 500, for instance, was trading at a record high in terms of price-to-sales ratios, a metric often used to gauge overvaluation.

He also noted a surge in rhetoric around "American exceptionalism" in late 2024, which he interprets as a contrarian indicator. “That was another signal that equities were nearing a massive top,” he said.

Tariffs and the Erosion of the U.S. Brand

Wood is particularly critical of the Trump administration’s trade policies, which he believes have permanently tarnished the U.S.'s reputation as a safe haven for global capital. “Trump’s tariffs have done permanent damage to America’s brand,” he wrote in a recent note to clients. He added that international net investment in the U.S. has plunged in recent years, a trend he attributes to the unpredictability and aggressiveness of U.S. trade policy.

Even if the administration were to reverse course, Wood believes the damage is already done. “Even if the president walks back most of his tariffs, the damage from Trump’s trade policy is likely permanent,” he said.

As a result, Wood is advising investors to diversify away from U.S. equities. “I would be adding to China, Japan, Europe, and India. That’s where global investors should be diversifying,” he said.

Port of Los Angeles Braces for Steep Decline in Cargo

On the ground, the economic impact of the tariffs is already being felt. Gene Seroka, Executive Director of the Port of Los Angeles, warned this week that cargo volume could drop by as much as 35% in the coming weeks. The port, which handles nearly half of all U.S. imports from China, is facing a sharp contraction in business as American retailers scale back orders in response to the 145% tariffs imposed on Chinese goods.

“This is a precipitous drop in volume,” Seroka told CNBC. “Shipments from China make up approximately 45% of our business. With these tariffs, many retailers have halted all shipments.”

The port is already seeing the effects, with 59 blanked sailings scheduled between May 1 and June 30. Seroka also noted that about a quarter of the usual number of arriving ships will be canceled in May.

Retailers and Manufacturers Adjust to New Trade Reality

The ripple effects of the tariffs are being felt across multiple sectors. Microsoft has raised prices on Xbox consoles, games, and accessories, while Harley-Davidson estimates a full-year cost impact of $130 million to $175 million due to tariffs. General Motors has cut its 2025 profit forecast, citing up to $5 billion in tariff-related costs.

Meanwhile, Chinese fast fashion giant Shein is restructuring its U.S. operations as the tariff regime closes loopholes that previously allowed it to offer ultra-low prices. In the luxury sector, more than 30 U.S. beauty and liquor brands are facing steep retaliatory tariffs in China, affecting their performance in travel retail and domestic markets.

Broader Economic Implications

The economic consequences extend beyond ports and corporate earnings. According to Torsten Slok, Chief Economist at Apollo Global Management, the decline in imports from China could lead to layoffs in the U.S. transportation and retail sectors. “We’re looking at potential empty shelves and a recession this summer,” Slok warned.

The Longshore union, representing port workers nationwide, has criticized the tariffs as “anti-working class,” pointing to job losses and reduced hours as cargo volumes fall.

Trade Talks and Market Sentiment

Despite the escalating trade tensions, there are signs of a potential thaw. The Trump administration has reportedly reached out to Beijing to reopen trade negotiations. China, in turn, has begun compiling a list of U.S. goods that may be exempt from its retaliatory tariffs.

Market sentiment has been volatile. Stocks rallied recently on hopes of a policy reversal, with Microsoft and Meta posting strong earnings that temporarily eased investor concerns. However, analysts remain cautious, noting that the underlying uncertainty around trade policy continues to weigh on long-term investment decisions.

Jefferies' Chris Wood Warns of US Stock Market Peak Amid Tariff Impact; LA Port Chief Predicts 35% Drop in China Trade

Key Updates

Nike, Adidas, and 74 Footwear Companies Urge Trump to Drop Tariffs, Citing 'Existential Threat' to Industry

Temu Shifts to U.S. Warehouses as De Minimis Tariff Loophole Closes Under New Trade Rules

U.S. Ends Duty-Free Imports Under $800: E-Commerce Giants Like Amazon and Shein Face New Tariffs

Trump-Era Tariffs on Chinese Imports Threaten U.S. Retail Inventory for July 4 and Thanksgiving

Vice President JD Vance Highlights 'Industrial Renaissance' at South Carolina Steel Plant Visit Amid Trump Administration's First 100 Days