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(Bloomberg) -- Donald Trump’s plans to impose sweeping tariffs on foreign-produced goods are likely to reignite the risk of high inflation and low US economic growth, posing a threat to stocks, according to a Lazard strategist.

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“It’s risky to not take Trump seriously in terms of the tariff policies discussed,” Ronald Temple, chief equity strategist at the $205-billion asset manager, said in an interview in London. “The implications for inflation, growth, the dollar, rates, Fed policy and corporate earnings are all pretty material. If you end up with a stagflationary environment, it’s hard to imagine an equity market that’s higher.”

Trump, the Republican candidate for president, has long embraced protectionist trade policies, pledging a 10% across-the-board tariff and steeper levies on Chinese-made goods. The 2024 Republican platform, available on Trump’s campaign page, mentions tariffs twice under a chapter on protecting American workers from “unfair trade,” suggesting stricter policies will enable lower taxes.

Economists at Goldman Sachs Group Inc. have said that if Trump wins, the tariffs will likely fuel inflation again and trigger higher rates to the tune of 130 basis points than what would’ve been the case.

To be sure, US stocks had thrived during Trump’s previous reign as they benefited from a lower corporate tax rate, which had offset the impact from tariffs imposed on steel and aluminum imports. The S&P 500 Index rallied more than 20% in the two years after the levies were introduced in 2018, before the pandemic upended global markets.

Under President Joe Biden, who has retained and increased those tariffs, the S&P 500 has gained 46% since he took office on Jan. 20, 2021.

For Temple, the current economic backdrop makes it difficult to extrapolate the investor play-book from Trump’s previous stint as president. Inflation, while cooling, is still above the Fed’s long-term target rate, while weak macro data have raised worries about a recession.

“In all prior elections, my advice to clients has been, don’t lose too much sleep because typically they don’t really move the needle economically,” Temple said. “This time is different.”

The strategist said a main point of difference between now and 2016 was the scope of the proposed trade policies.

“During Trump’s first term, the average tariff rate applied to US imports went from 1.5% to 3%,” he said. “What he’s talking about now would take it to nearly 20%. That’s a big nut to crack.”

In response to a Bloomberg News request for comment, Brian Hughes, senior adviser of the Trump campaign, said the former president’s “policies will fuel growth, drive down inflation, inspire American manufacturing, all while protecting the working men and women of our nation from lopsided policies tilted in favor of other countries.”

Tariff Playbook

Temple said a Kamala Harris presidency likely wouldn’t have a detrimental effect on the economy, largely because he expects Republicans to capture control of the Senate and blunt many of her primary proposals, particularly around taxation.

The Harris campaign referred Bloomberg to remarks from the presidential debate between her and Trump on Tuesday night in response to a request for comment.

“I am offering what I describe as an opportunity economy, and the best economists in our country, if not the world, have reviewed our relative plans,” Harris said.

If Trump were to win, investors will have to start war-gaming how to invest in a higher-tariff regime, Temple said.

“What you really want to start thinking about is how do you identify vulnerabilities in different companies’ supply chains,” he said. “How dependent are they on imports from China?”

The strategist expects a Trump presidency to spark a sector rotation rather than a correction in the S&P 500 as a whole.

“The clearest Trump trade is financials, energy and parts of health care, while the losers are going to be anyone with a really extensive global supply chain,” Temple said, adding that there were also opportunities in the consumer staples and infrastructure sectors.

--With assistance from Jeremy Herron and Esha Dey.

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