From BUSINESS INSIDER vis-à-vis Trump’s pledge to slap a 20% or higher tariff on all
imported goods has this shocking headline:
“These 5 parts of the stock market are most at risk if Trump wins the
election and implements wide-reaching tariffs, Barclays says”
Key Points According to Barclays:
§
Trump's proposed tariffs would lower S&P 500
earnings as much as 4.7% next year.
§
Trump has pledged to unleash universal tariffs
on all U.S. trade if elected.
§
Barclays outlined five sectors that are the most
exposed to losses if Trump wins and implements his tariff plan.
§
Trump's plan to tax virtually all imports would
take a big toll on 2025 earnings (Barclays research found).
§
Current outlooks view the election as a coin
toss between Trump and Kamala Harris.
§
The outcome has high stakes for trade policy, as
the former president has committed to unleashing trade barriers around the U.S.
Trump said during the
presidential debate with Harris: “Other
countries are going to finally, after 75 years, pay us back for all that we've
done for the world. And the tariff will be substantial in some cases.”
Trump previously said
that if he is re-elected: “All
countries could face a 10% universal tariff, while duties on Chinese products
would reach as high as 60%. Plus, a 100% tariff on cars imported through Mexico
could also be in store.”
If implemented, Barclays expects these policies to cut into
the S&P 500's earnings they said adding: “To be sure, U.S firms have some
way of navigating higher costs associated with tariffs. That includes shifting
supply chains or passing prices on to consumers as higher cost and tax on the
item(s).”
Import duties will hit profit margins to a degree, as
companies risk losing market share if they don't absorb some of the costs.
Barclays analysts
wrote: “We find that SPX (S&P) earnings
would be negatively impacted by 3.2% if the new Trump tariffs are enacted and
another 1.5% if those countries were to retaliate with similar measures.”
Companies that rely
more heavily on supply chains are especially at risk, with five sectors in most
danger: (1) Materials, (2) Discretionary, (3) Industrials, (4) technology,
and (5) healthcare.
1. Discretionary
stocks would suffer the largest earnings-per-share impact from import tariffs
alone — and sector earnings would fall around 10%.
2. Materials
is most impacted by retaliatory tariffs on exports with sector earnings dropping
close to 8%.
Other economists have loudly criticized Trump's tariff idea
as fuel for inflation, given that prices will rise amid a pullback in foreign
products. Accordingly, inflation would climb 0.09 percentage points in the
short run, and U.S GDP could take a 1.2% hit in the first 12 months alone.
Barclays concluded:
“While the new proposed tariffs would
have a modest direct negative impact on corporate earnings if implemented, the
second order effects from higher cost inflation and slowing economic growth
would be an incremental headwind to corporate earnings, and cause further pain.”
My 2 Cents: I’m not an economist by any stretch, but I do have money on Wall Street earned or lost via my government TSP fund (C & G fund via the S&P).
I would be impacted by this insane Trump tariff plan outlined above. Even without my TSP I would lose money on prices (tariff is added tax) on things I need to buy that says “MADE IN CHINA.”
The B/L: Trump is totally ignorant about tariffs and as the expression example above says “He doesn’t know a tariff from his ass or a hole in ground.”
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