In the wake of rising trade tensions between China and the United States, Wilmington Trust Chief Economist Luke Tilley has been making major adjustments to his investment strategy.

Continue Reading Below

“We’ve been overweight to the United States in U.S. large cap and had added to it back in December and January in the selloff but even though we’ve been optimistic about the U.S. economy for quite some time, we thought the U.S.-China trade conflict posed a major risk,” he said on Making Money Monday.

While Tilley acknowledges trade negotiations appeared to be progressing in a positive manner, he believes everything changed when President Trump announced he would increase tariffs on $200 billion worth of Chinese goods.

“I think what we found out last week is not necessarily just that the Chinese reneged or sort of backed out. I think what we found out over the course of the week was that there are very deep-seeded differences between the two parties…even though it is in the best interests of both countries to ultimately come to a deal, it looks like we have some time ahead of us here where we might have escalating tariffs which would be bad for the economy and for profitability, so we made the decision to pull back both on U.S. large cap and also on emerging markets this past Friday.”