Those responsible for global policies and Wall Street analysts have been preparing for the imposition of huge commercial barriers by the new Trump administration. However, in its first week in power, the Administration has focused more on the internal field, leaving the global trade panorama greatly without changes.
The tariff threats of President Donald Trump range from a universal tax on imported goods to measures specifically designed for certain sectors and countries, and have the potential to influence inflation, economic growth and stock market performance.
Trump plans to impose a 25 % tariff on Mexico and Canada, the largest US business partners, as of February 1, arguing that they may be necessary as retaliation for migration and traffic of fentanyl.
Canada mainly exports crude oil and other energy products, in addition to cars and auto parts, as part of the automotive manufacturing chain of North America. Mexico exports various goods in the industrial and automotive sectors.
This is what the main Wall Street slides say about the possible impact of US tariffs on inflation, economic growth and profits:
Companies and profits in the US
Analysts pointed out that tariffs on imports in the US could affect sectors that depend on supply chains distributed by North America and China.
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Trump’s tariff threats against Canada, Mexico and China could represent an impact of 2.8% on the profits of the S&P 500 if they are implemented in their entirety, with the sectors of discretionary materials and consumption as the most affected, according to Barclays analysts.
Citigroup indicated that tariffs aimed at specific sectors would have a lower impact on stock markets compared to broader tariffs. A small shock in import prices within a stage of reduced tariffs could result in a reduction of 50 base points in the gross margin of the S&P 500, while broader tariffs could make the margins reduce in 250 base points.
Bofa Global Research warned that tariffs to Mexico could harm appliance distributors such as Whirlpool. Approximately 40% of sales of the appliance industry in the US come from imports, compared to 20% in the case of Whirlpool, and most imports come from Mexico.
Masc and Fortune Brands construction products companies have some suppliers in China. However, they also have dual suppliers for many products and could compensate part of the impact of tariffs with price increases, according to Bofa.
Builders FirstSource could benefit in the short term of tariffs on Canadian wood imports, although this would probably be counteracted by a reduction at the beginning of new projects by housing builders.
Goldman Sachs said that Ford and Tesla car manufacturers would suffer a strong blow if tariffs are imposed on Canada and Mexico, since these two countries represent almost a fifth of the value of consumption and the production of vehicles in the US.
The sliding hopes that there is more likely to impose tariffs on China than Canada and Mexico, while Royal Bank of Canada (RBC) believes that any tariff increase could exclude car manufacturers.
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RBC provides that tariffs on Mexican imports could represent a problem for General Motors and that production could be transferred to the US.
Blackrock warned that exporters’ gain margins could be affected if inflation keeps interest rates high and causes a rebound to the dollar to its maximum level of 2022.
Inflation
Analysts expect the inflationary pressure derived from tariffs to maintain the Federal Reserve with a strict position in its monetary policy, which would increase financing costs for companies and prolong high inflation.
Barclays strategists indicated that the proposed tariff .
Goldman Sachs estimates that, if implemented, the proposed tariffs would increase the EU PCE index, excluding volatile elements such as food and energy, by 0.9%.
Capital Economics indicated that a 10% universal tariff and a 60% tariff on China would add approximately one percentage point to the US consumer price index. If Trump continues with his threats to impose additional tariffs on specific countries, inflation could increase by approximately 2 percentage points.
With Reuters information
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