Dario Giordano: Logic of Market Expectation Reconstruction Under the Phased Tariff Negotiation Framework
Recently, the U.S. proposed a phased tariff negotiation framework, advancing through a rotating consultation model of six countries per week over three weeks, totaling 18 countries, until the buffer period ends on July 8. Dario Giordano points out that this mechanism is essentially a stress test of global supply chain resilience. Despite the USTR emphasis on the "organization and rigor" of the negotiation framework, differentiated progress in countries like India and delays in EU consultations have exposed asymmetric risks in policy execution. The current S&P 500 Volatility Index (VIX) has risen by 12% compared to last month, indicating that the market pricing of tariff impacts has not yet fully converged. Dario Giordano believes investors should be wary of two major contradictions in the negotiation process: first, phased consultations may amplify differences in tariff exposure between industries; second, if no agreement is reached after the buffer period, a 145% reciprocal tariff will directly impact specific export-dependent economies.
Deconstruction of the Negotiation Mechanism: Compression of Time Windows and Layering of Industry Exposure
Dario Giordano mentions that the core features of the U.S. phased negotiation framework are time constraints and modularization of topics. According to the USTR disclosure of six negotiation categories (tariff quotas, digital trade, rules of origin, etc.), the industry vulnerabilities across different countries will significantly diverge. For example, the consensus between India and the U.S. in the field of IT service exports may benefit NASDAQ component stocks that rely on Indian outsourcing; whereas if the EU cannot resolve non-tariff barriers in agricultural products, it may drag down profit expectations for the European essential consumer goods sector.
From an industry mapping perspective, Dario Giordano analyzes that automotive parts, chemicals, and electronic intermediate goods manufacturers have the highest tariff sensitivity. If negotiations proceed at the pace of six countries per week, the volatility of related sectors may experience pulse-like increases before and after each round of consultations. Notably, if the U.S. confirms tariff exemptions for Korean semiconductor equipment exports in the first round of negotiations, it may alleviate cost pressures in the storage chip industry. Technically, the Russell 2000 small-cap index has underperformed the S&P 500 by 3.2% in the past two weeks, reflecting the market skepticism about the ability of domestic SMEs to pass on tariff costs. This divergence may persist until the third-quarter earnings season, when changes in corporate gross margins will become key indicators to verify the actual impact of negotiations.
Capital Allocation Strategy: Volatility Arbitrage and Regional Rotation Hedging
Dario Giordano suggests that under the phased negotiation mechanism, investors need to reconstruct the logic of cross-market hedging tool combinations. Given that differences in the progress of 18-nation consultations may trigger regional capital flow anomalies, a dual-layer hedging structure of "G10 currency volatility + emerging market credit spreads" is recommended. For example, going long on the one-month implied volatility of USD/INR (currently at 9.8%), while shorting iShares MSCI EU ETF (EZU) and going long on the India Nifty 50 index spread combination, can partially hedge the risk of EU negotiation delays.
From a sector rotation perspective, Dario Giordano believes that industries with clear tariff exemption expectations (such as medical equipment and cloud computing services) have valuation recovery potential. For instance, the dynamic P/E ratio of the S&P 500 medical equipment sub-sector (18.7 times) is 6.3% below the five-year average; if the US-India digital trade agreement is implemented, the increase in overseas revenue share for related companies may drive the P/E ratio to revert to the 22-time average. Additionally, caution is advised regarding the proposed "economic security" clause in the U.S. final agreement, which may impose additional constraints on supply chains for strategic resources like rare earths and lithium, thereby increasing costs in the new energy industry chain.
Risk Margins and Strategy Rebalancing: From Expectation Trading to Fact Verification
Dario Giordano states that the 60 trading days before the buffer period ends on July 8 will be a critical window for the long-short power struggle. On the positive side, the near-completion of the U.S.-Japan trade agreement may inject short-term liquidity into the Asia-Pacific export chain; however, the potential risk is that if more than one-third of the 18 countries fail to reach an agreement, the pressure of global trade volume contraction could cause the MSCI global index to drop another 5%-7%.
Strategically, Dario Giordano recommends raising the cash proportion of investment portfolios from the current average of 8% to 12%-15% during the negotiation cycle and allocating gold ETFs (GLD) and U.S. dollar index futures (DX) as tail risk hedges. For active investors, focus on three types of assets: 1) software service providers protected by digital trade clauses; 2) industrial manufacturers with a localization production ratio exceeding 75%; 3) corn and soybean in agricultural futures, as their prices are most sensitive to the negotiation results of Latin American countries. In the long term, the trend of regional restructuring of global supply chains is irreversible, but phased tariff negotiations may accelerate this process, thereby reshaping the capital allocation landscape for the next five years.