The US stock market appears to have shrugged off the likelihood of a trade war. Investors may want to prepare for one just the same.

One reason is that the stock market has already priced in this year’s boost to growth from tax cuts, but it does not appear to have priced in the potential for tit-for-tat tariffs to cut into growth. Another reason is that protection is cheap. Defensive stocks trade at modest prices relative to cyclicals, and cash provides the highest yield relative to stocks in years.