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As markets buckle up for Trump tariffs, these global sectors brace for a rough ride


Trump's tariffs will bring China 'very close' to a recession: Strategist

U.S. President Donald Trump this weekend announced hefty tariffs on his country’s three biggest trading partners, leaving investors scrambling to position themselves for a global trade war.

Canada and Mexico face 25% duties on their exports to the U.S., with a lower 10% levy imposed on Chinese goods. Canada has already responded with retaliatory tariffs of 25% against $155 billion of U.S. goods.

Trump has, meanwhile, stated that the European Union will be next in the firing line, with the U.K. also under consideration.

Though Trump repeatedly threatened tariffs on the campaign trail, Deutsche Bank analyst Jim Reid said in a Monday note that the market had been “completely under-pricing the risks” and would now be in “severe shock.”

Among the expected short- to medium-term impacts are a slowdown in global economic growth, particularly in countries with large manufacturing sectors, a spike in oil prices, higher prices for U.S. consumers and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result.

planetnews

Trump tariffs could create a new challenge for Chinese policymakers: A growth rate below 5%

Outside of the U.S. and the three other economies directly involved, sectors around the world are braced for impact from the tariffs.

Here are some of the areas expected to be hit:

Automotives

Employees work on the assembly line of new energy vehicles at a factory of Chinese EV startup Leapmotor on April 1, 2024 in Jinhua, Zhejiang Province of China.

Auto stocks plunge as Trump tariffs spark trade war concerns

Chip firms

The oil and gas market is a 'wild west' right now after Trump tariffs: Pickering Energy Partners

“The latest moves won’t do much to calm the high tensions which have hit the semiconductor sector,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Monday.

“Companies like Nvidia rely on the production of chips from outsourced factories overseas, like China and Mexico – but many other parts needed to construct AI data centers could also be vulnerable to tariffs, given they are imported.”

Consumer goods

Workers weld acid batteries at the Leoch International Technology Ltd. factory in Saltillo, Coahuila, Mexico, on Monday, Oct. 7, 2024. 

Trump tariffs could raise prices on technology like laptops, smartphones and AI

One example is drinks giant Diageo, which has already been struggling with weakening demand in North America.

Fintan Ryan, consumer equity research analyst at Goodbody, told CNBC that tariffs were one of the biggest challenges for the company this year as the U.S. accounts for roughly 45% of the company’s operating profit.

Around 70% of its sales in the U.S. are imports, meanwhile, including Canadian whiskey, Mexican Tequila, Scotch, and Baileys and Guinness from EU member Ireland. Diageo is due to report earnings on Tuesday.

Chinese e-retailers

Basic materials and industrials

Basic materials companies — which explore, extract and process products including metals, wood, glass, plastic, coal and precious stones — are set to face a drag from a weaker global growth outlook, Dan Boardman-Weston, CEO at BRI Wealth Management, told CNBC’s “Street Signs Europe.”

Europe’s Stoxx 600 mining index was around 1.5% lower by Monday afternoon, while the industrials index, which includes machinery producers, fell 1.7%.

The economic impact is expected to felt particularly hard in Canada, with analysts at Scotiabank saying Monday that tit-for-tat tariffs with its top trading partner and closest ally were the “worst possible scenario for Canada.”

Its economy and productivity are weak, debt is high and trade diversification is low, the analysts added, singling out the country’s already-declining softwood lumber industry as particularly at risk.

Green energy

Renewable energy producers around the world could also get hit by tariffs, with China, Mexico and Canada all key bases for the production of machine parts used for solar, wind and other green technologies.

In a Sunday statement, the American Clean Power Association warned of the negative impact on the green energy industry, citing increased costs of energy production due to Canadian and Mexican machinery production.

More broadly, Morningstar analysts warned in a December note that tariffs could be detrimental to the energy transition.

“Since tariffs are ultimately taxes paid by consumers, they could lead to higher inflation and interest rates, as well as slower growth. If this happens, it will undermine the profitability of solar and wind installations, which depend on long-term project finance and have been hurt by high interest rates in recent years,” they said.

— CNBC’s Ganesh Rao, Michael Bloom, Annie Palmer, Sam Meredith and Ryan Browne contributed to this story.

Trump's tariffs will bring China 'very close' to a recession: Strategist

U.S. President Donald Trump this weekend announced hefty tariffs on his country’s three biggest trading partners, leaving investors scrambling to position themselves for a global trade war.

Canada and Mexico face 25% duties on their exports to the U.S., with a lower 10% levy imposed on Chinese goods. Canada has already responded with retaliatory tariffs of 25% against $155 billion of U.S. goods.

Trump has, meanwhile, stated that the European Union will be next in the firing line, with the U.K. also under consideration.

Though Trump repeatedly threatened tariffs on the campaign trail, Deutsche Bank analyst Jim Reid said in a Monday note that the market had been “completely under-pricing the risks” and would now be in “severe shock.”

Among the expected short- to medium-term impacts are a slowdown in global economic growth, particularly in countries with large manufacturing sectors, a spike in oil prices, higher prices for U.S. consumers and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result.

planetnews

Trump tariffs could create a new challenge for Chinese policymakers: A growth rate below 5%

Outside of the U.S. and the three other economies directly involved, sectors around the world are braced for impact from the tariffs.

Here are some of the areas expected to be hit:

Automotives

Employees work on the assembly line of new energy vehicles at a factory of Chinese EV startup Leapmotor on April 1, 2024 in Jinhua, Zhejiang Province of China.

Auto stocks plunge as Trump tariffs spark trade war concerns

Chip firms

The oil and gas market is a 'wild west' right now after Trump tariffs: Pickering Energy Partners

“The latest moves won’t do much to calm the high tensions which have hit the semiconductor sector,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Monday.

“Companies like Nvidia rely on the production of chips from outsourced factories overseas, like China and Mexico – but many other parts needed to construct AI data centers could also be vulnerable to tariffs, given they are imported.”

Consumer goods

Workers weld acid batteries at the Leoch International Technology Ltd. factory in Saltillo, Coahuila, Mexico, on Monday, Oct. 7, 2024. 

Trump tariffs could raise prices on technology like laptops, smartphones and AI

One example is drinks giant Diageo, which has already been struggling with weakening demand in North America.

Fintan Ryan, consumer equity research analyst at Goodbody, told CNBC that tariffs were one of the biggest challenges for the company this year as the U.S. accounts for roughly 45% of the company’s operating profit.

Around 70% of its sales in the U.S. are imports, meanwhile, including Canadian whiskey, Mexican Tequila, Scotch, and Baileys and Guinness from EU member Ireland. Diageo is due to report earnings on Tuesday.

Chinese e-retailers

Basic materials and industrials

Basic materials companies — which explore, extract and process products including metals, wood, glass, plastic, coal and precious stones — are set to face a drag from a weaker global growth outlook, Dan Boardman-Weston, CEO at BRI Wealth Management, told CNBC’s “Street Signs Europe.”

Europe’s Stoxx 600 mining index was around 1.5% lower by Monday afternoon, while the industrials index, which includes machinery producers, fell 1.7%.

The economic impact is expected to felt particularly hard in Canada, with analysts at Scotiabank saying Monday that tit-for-tat tariffs with its top trading partner and closest ally were the “worst possible scenario for Canada.”

Its economy and productivity are weak, debt is high and trade diversification is low, the analysts added, singling out the country’s already-declining softwood lumber industry as particularly at risk.

Green energy

Renewable energy producers around the world could also get hit by tariffs, with China, Mexico and Canada all key bases for the production of machine parts used for solar, wind and other green technologies.

In a Sunday statement, the American Clean Power Association warned of the negative impact on the green energy industry, citing increased costs of energy production due to Canadian and Mexican machinery production.

More broadly, Morningstar analysts warned in a December note that tariffs could be detrimental to the energy transition.

“Since tariffs are ultimately taxes paid by consumers, they could lead to higher inflation and interest rates, as well as slower growth. If this happens, it will undermine the profitability of solar and wind installations, which depend on long-term project finance and have been hurt by high interest rates in recent years,” they said.

— CNBC’s Ganesh Rao, Michael Bloom, Annie Palmer, Sam Meredith and Ryan Browne contributed to this story.

https://image.cnbcfm.com/api/v1/image/108026037-17247737142024-07-25t152338z_164475366_rc2fy8aksh9r_rtrmadp_0_amazon-chips-lab.jpeg?v=1724773753&w=1920&h=1080

2025-02-03 13:57:00

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