A strategist at investment bank Lazard said that former US President Donald Trump's plan to impose tariffs on foreign-produced commodities could potentially rekindle the risk of high inflation and low economic growth in the United States, posing a threat to the US stock market.

"There are risks in not taking Trump's proposed tariff policy seriously," said Ronald Temple, chief stock strategist at the bank, in an interview, "This has a significant impact on inflation, economic growth, the US dollar, interest rates, Federal Reserve policy, and corporate profits. If stagflation occurs in the end, it is hard to imagine that the stock market will rise even higher."

For a long time, Republican presidential candidate Trump has always advocated protectionist trade policies. In this election, he has repeatedly stated his plan to impose a universal tariff of 10% on imported goods from all countries and a tariff of 60% or higher on goods from China.

Goldman Sachs previously stated that if Trump wins the election, tariffs could exacerbate inflation and lead to interest rates 130 basis points higher than before.

Temple says that it is difficult to infer investors' strategies from Trump's previous presidential term given the current economic background. While inflation has cooled, it still remains higher than the Federal Reserve's long-term target rate, and weak macroeconomic data has sparked concerns about an economic recession.

"In all previous elections, my advice to clients was not to worry too much, because usually they wouldn't really change the situation economically. This time it's different."

According to the strategist, one major difference between now and 2016 is the scope of proposed trade policies. He states, "In Trump's first term, the average tariff rate on imported goods in the United States increased from 1.5% to 3%. But what he is currently proposing would bring the average tariff rate close to 20%. That's a big challenge."

Brian Hughes, senior advisor to Trump's campaign team, argued that the former president's "policies will drive economic growth, reduce inflation, incentivize American manufacturing, while protecting our country's working class from the impact of imbalanced policies towards other countries."

Temple says that if Trump wins, investors will have to start practicing how to invest in a higher tariff environment.

"What you really need to start thinking about is how to identify the vulnerabilities in different companies' supply chains," he said.

The strategist expects that Trump's election as president will trigger industry rotation, rather than an adjustment of the entire S&P 500 index.

"The most obvious Trump trades are in finance, energy, and some medical care, while the losers will be anyone with a truly broad global supply chain. Consumer necessities and infrastructure also have opportunities," he added.

Finally, Temple also added that the election of Harris as president may not have an adverse impact on the economy, mainly because he expects the Republicans to gain control of the Senate and weaken many of her key proposals, especially in terms of taxation.

Editor/Rocky