July 14, 2025 – JPMorgan’s top strategist, Mislav Matejka, continues to favor domestic-focused stocks over exporters in international markets, citing their insulation from currency fluctuations and rising tariff uncertainty.
In his latest investor note, Matejka wrote, “We stay bullish on Domestic vs Exporters stocks within international markets,” highlighting that this style tilt has outperformed significantly in Japan, the Eurozone, and the U.K., with returns between 5% and 20% so far in 2025.
While U.S. exporters may benefit from a weaker dollar, Matejka pointed out that international domestic stocks are better shielded from the volatility stemming from tariffs and FX movements.
📈 Tariffs Surge, Trade Uncertainty Grows
The effective U.S. tariff rate has spiked from 2.3% in late 2024 to around 13%, and could approach 20% if sector-specific tariffs are implemented. This increase would be far greater than the 1.4% hike seen during the 2018 trade war.
Matejka warned that corporations, which initially absorbed cost pressures, may begin to pass tariffs onto consumers as they adjust to prolonged trade tensions. This could lead to higher inflation, weakened demand, and shrinking corporate margins.
📊 Domestic vs Exporters: Strategic Allocation
In the Eurozone, Matejka’s Domestic basket includes companies such as:
- Koninklijke KPN NV (AS:KPN)
- Zalando (ETR:ZALG)
- Poste Italiane (BIT:PST)
His Exporters basket comprises globally exposed giants like:
- LVMH (EPA:LVMH)
- SAP (ETR:SAPG)
- Sanofi (EPA:SASY)
According to Matejka, local demand and limited foreign exchange exposure put domestic stocks in a stronger position, especially with inflation and bond yields remaining uncertain.
💵 In the U.S., Exporters Still Have the Edge
Contrary to international markets, U.S. exporters are expected to perform well due to a weaker dollar, which boosts competitiveness abroad. However, Matejka also signaled potential short-term strength in the greenback, followed by a broader decline in H2 2025, possibly fueling imported inflation.
He cautioned that the economic fallout from tariffs is still unfolding and could hurt the Federal Reserve’s inflation credibility, potentially lifting bond yields for the wrong reasons.