Written by: Alex Dryden 2019 has delivered generous returns for equity investors with the S&P 500 returning 23% year-to-date. Dovish central banks, stabilizing global growth and a better than expected Q3 earnings season have all helped lift equity markets to record highs; however, the consistent drip feed of positive news flow regarding trade talks has also been a major factor. The mood music around U.S.-China trade talks remains buoyant and a potential deal might be within reach. However, investors should not make the mistake of viewing a potential U.S.-China deal as the finish line for global trade tensions. As we highlight in this week’s chart, the U.S. runs a $181 billion trade deficit in goods with the European Union (EU) and therefore, any U.S.-China trade deal would likely see the focus of trade renegotiations shift from China to Europe. Within the U.S.-EU trade balance, U.S. trade representatives have cited uneven terms-of-trade in areas such as the auto industry. European produced autos sold in the U.S. are subject to a 2.5% tariff; meanwhile, U.S. producers would be subject to a 10% tariff if they exported to the EU. These potential flashpoints mean that global trade tensions may continue into 2020, weighing on global growth and acting as a headwind for further equity market gains. Related: Will the Fed Cut Rates in December?